By Lukman Otunuga Research Analyst, ForexTime
Fasten your seatbelts folks, the next few days could be volatile for the Dollar.
This week is jampacked with a host of speeches from US Fed officials, including the joint congressional testimony by Fed Chair Jerome Powell and Treasury Secretary Yellen later today. Normally non-events for the market, these speeches could become real shakers if fresh insight is offered on monetary policy and the health of the US economy.
Powell is widely expected to reiterate the central bank’s plan to support the recovery “for as long as it takes” during his testimony to Congress. Given the market sensitivity to the developments in the bond markets, Powell and Fed officials may be forced to choose their words wisely.
What about the Dollar?
The Dollar entered Tuesday on a positive note, almost clawing back all the losses from the previous session. Prices are approaching the 92.10 resistance level as of writing with a breakout on the horizon.
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The upside could face obstacles in the short term if Powell reiterates a dovish tone during his testimony. However, bulls are likely to remain supported by rising bond yields in the medium term. Appetite towards the Dollar has been sweetened by the speedy rollouts of Covid-19 vaccines while Biden’s $1.9 trillion stimulus continues to brighten the growth outlook, driving up bond yields.
Focusing on the technicals, prices are trading above the 20 Simple Moving Average while the MACD trades above the 0 level. A solid breakout above 92.10 could open the doors towards 92.50 and 93.00, respectively. Should prices sink back below 91.70, the DXY could re-test the 91.35 support and 90.75.
Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.
Article by ForexTime
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