Forex News: US Dollar Takes Center Stage as Fed Chairman Designate Powell Testifies in Washington DC
Forex News: The pair made new advances during the early stages of yesterday’s trading session and pierced through last week’s high at 1.1944. However, the US Dollar showed signs of recovery in the afternoon and price returned below resistance.
After moving above 1.1944 and returning below it, the pair is now showing two candles with a very long wick in their upper part. This rejection combined with the overbought condition of the Relative Strength Index, increases the chances of a move lower that may find support around 1.1900 - 1.1875. However, the pair’s movement will likely be influenced by the testimony of Fed Chair Designate Powell, so the technical aspect may be secondary.
At 3:00 pm GMT, Fed Chair Designate Jerome Powell will testify before the Senate Banking Committee. He is designated to become Chairman of the Federal Reserve starting in February 2018, so his speech will probably have a strong impact on the US Dollar, thus caution should be used.
At the same time the U.S. Consumer Confidence survey comes out, showing the opinions of about 5,000 households about current and future economic conditions. The expected reading is 123.9 and higher numbers usually strengthen the greenback because rising consumer confidence is indicative of future increase in consumer spending.
Similar to the Euro, the Pound won the early battle against the US Dollar but the gains were erased in the second part of yesterday’s trading session, partly due to better than expected U.S. house sales.
The last candle shows a huge upper wick, which is a clear and strong sign of rejection and this is the main reason why we expect to see today a drop into 1.3320. If that support is broken, the medium term uptrend will be weakened and we will probably see more choppy movement. Both currencies are affected today by major events and those will play a major role for direction.
At 7:00 am GMT the Bank of England will reveal the Bank Stress Test Results and the Financial Stability Report. Half an hour later, BOE Governor Carney will hold a press conference about the two releases that were just mentioned and this cluster of events is likely to generate strong volatility on all Pound pairs, so caution is recommended.
Written by: Bogdan Giulvezan
The article above is based on the writer’s 7-year experience and it does not constitute trading advice or investment recommendations, just a personal opinion and view of the market.