Talking Points:
– USDOLLAR Pares Decline as Yellen Sees FOMC Staying on Current Path
– British Pound to Eye Fresh Highs on More Hawkish BoE
Index
Last
High
Low
Daily Change (%)
Daily Range (% of ATR)
DJ-FXCM Dollar Index
10622.72
10643.03
10606.71
-0.21
96.19%
USDOLLAR Daily
Chart – Created Using FXCM Marketscope 2.0
2014 Range in Focus Ahead of Humphrey-Hawkins Testimony
Bearish RSI Momentum Highlights Risk for Fresh Lows
Interim Resistance: 10,753 (23.6 expansion) to 10,759 (61.8 retracement)
Interim Support: 10,561 (100.0 extension)- Closing Basis
Release
GMT
Expected
Actual
NFIB Small Business Optimism (JAN)
12:30
93.9
94.1
Fed’s Charles Plosser Speaks on U.S. Economy
14:00
Fed Chair Janet Yellen Testifies to House Committee
15:00
Wholesale Inventories (DEC)
15:00
0.5%
0.3%
Wholesale Trade Sales (MoM) (DEC)
15:00
0.7%
0.5%
The Dow Jones-FXCM U.S. Dollar Index (Ticker: USDollar) bounced back from a fresh yearly low (10,609), and the greenback may continue to track higher over the remainder of the week as we see a growing number of Fed officials push for a more aggressive approach in normalizing monetary policy.
Indeed, Fed Chair Janet Yellen said the central bank will stick to its current path as it moves away from its easing cycle, while Philadelphia Fed President Charles Plosser, who votes on the Federal Open Market Committee (FOMC) this year, favors speeding up the pace of the taperas he’s ‘worried’ that the board will be late in raising the interest rate.
In light of the fresh batch of central bank rhetoric, it seems as though we will see another $10B reduction at the March 19 meeting, and the policy outlook should continue to limit the downside for the greenback as long as the Fed stays on course to conclude Quantitative Easing (QE) later this year.
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AUDUSD Daily
Remains at Risk For Lower High- Close Above Resistance to Foster Larger Correction
Interim Resistance: 0.9050 (23.6 expansion) to 0.9080 (38.2 retracement)
Interim Support: 0.8670 (100.0 expansion) to 0.8700 (78.6 expansion)
Three of the four components strengthened against the greenback, led by a 0.88 percent rally in the Australian dollar, and higher-yielding currency may face a larger correction over the near-term as it threatens resistance.
Indeed, rising home prices in the $1T economy dampens the Reserve Bank of Australia’s (RBA) scope to further assist with the rebalancing of the real economy, but Governor Glenn Stevens may keep the door open to implement another rate cut later this year as the central bank head sees higher unemployment along with subdued wage growth.
As a result, we will maintain a long-term bearish view for the AUDUSD as it continues to carve a series of lower highs paired with lower lows, and the deviation in the policy outlook should continue to limit the topside for the aussie-dollar as the Fed anticipates a more robust recovery in 2014.
— Written by David Song, Currency Analyst
To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong.
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Source: Daily fx