Dollar Strength Depends on Interest Rate Clues

August 29, 2016

Today, Fed Chairman Janet Yellen will make a speech at 14:00 GMT. In addition, the US Q2 GDP Growth second estimate (QoQ) annualized figure, and Goods Trade Balance for July, to be released at 12:30 GMT.

The dollar index (DXY) rallied yesterday, helped by the positive Durable and Core Durable Goods Orders figures. It tested the major resistance at 94.73 then pulled back. This morning it tested the support level at 94.50 then bounced off. It is currently trading around the level at 94.60. The 4 hourly KD indicator is at a low level, suggesting a rebound.

Keep an eye on the US economic indicators and Yellen’s speech to be released later, as it will influence the market sentiment and the strength of the dollar. With positive readings or hawkish comments, DXY will likely to test the resistance at 94.73 again. The next resistance level is at 94.85, followed by 95.00. While lower-than-expected figures or dovish comments, will likely test the downside support line at 94.50 again. The next support level is 94.35.

Also we will get a series of economic figures out of the US, to be released at 12:30 GMT on Monday 29th Aug, including PCE (Personal Consumption Expenditure) (YoY and MoM), Core PCE (YoY and MoM), Personal Income (MoM) and Personal Spending figures for July.

EURUSD

EURUSD has been oscillating in an uptrend channel since 27th July due to the weakness of the dollar.
On the daily chart, it hit a two-month high of 1.1365 on 18th August, followed by a retracement, as touched the major downtrend line resistance.

The downside support line is 23.6% Fibonacci retracement level at 1.1268, followed by 1.1240 and 1.1200.
The upside resistance level is at 1.1300, followed by 1.1350.

Keep an eye on the US economic indicators and Yellen’s speech to be released at 12:30 and 14:00 GMT respectively today, as it will influence trend of EURUSD.

USDJPY

On the 4 hourly chart, USDJPY has formed a Consolidation pattern since 24th Aug.

The downside uptrend line support is at 100.220, followed by 100.000.
The upside downtrend line resistance is at 100.600, followed by 100.800 and 101.000.

Keep an eye on the US economic indicators and Yellen’s speech today, as the consolidation pattern will likely be broken.

GBPUSD

On the 4 hourly chart, GBPUSD has formed a Consolidation pattern.

The support line is at 1.3200, followed by 1.3170.
The upside resistance level is at 1.3230, followed by 1.3250.

Keep an eye on the US economic indicators and Yellen’s speech today, as the consolidation pattern will likely be broken.

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