February 15th Morning Brief – Focus Remains on Fed Chair Yellen
Dave Green • 2 min read
Yesterday, the markets remained highly volatile during the late European and New York sessions in the wake of Fed Chair, Janet Yellen's, speech. Particularly, the U.S Dollar Index soared to trade at $101.25, up +0.05 points and +0.05% based on the hawkish speech by Yellen. She spoke in congressional testimony that the U.S. central bank would contemplate hiking interest rates at its forthcoming meeting if economic events come in line with expectations.
Today's economic calendar is full of U.S and U.K. indicators. Here are the ones to focus on:
- GBP: Average Earnings Index 3m/y
- GBP: Claimant Count Change
- GBP: Unemployment Rate
- USD: CPI m/m
- USD: Core CPI m/m
- USD: Core Retail Sales m/m
- USD: Retail Sales m/m
- USD: Capacity Utilization Rate
- USD: Industrial Production m/m
- USD: Fed Chair Yellen Testifies
EUR/USD, the top traded currency pair
Recalling the previous analysis shared yesterday, the EUR/USD solely made us 30 pips to close our trade at take profit. Nevertheless, right now the pair is trading slightly bullish at $1.0581, adding +0.0004 points and +0.04% in the early Asian trading sessions. The bearish tone in this pair was supported by hawkish Janet Yellen and ongoing developments in the Eurozone.
Let's have a look at the technical side of the EUR/USD. We can see in the chart that the RSI is holding in an oversold territory. Moreover, the pair is also having a support around $1.0560 and we can expect a retracement up to $1.0588 (38.2% Fibonacci) and $1.0605 (61.8% Fibonacci) levels.
Based on above fundamentals and technicals, I would recommend investors to have their buying positions above $1.05608, along with a take profit of $1.0594 and a stop loss below $1.05565.
USD/JPY, the safe haven currency
At the moment, the USD/JPY is soaring to trade at $114.37, up +0.11 points and +0.10% as the Japanese Yen lost its appeal after the meeting between Japanese Prime Minister, Shinzo Abe, and U.S President, Donald Trump. During their weekend meeting, Mr. Abe agreed that issues related to forex should be left to finance leaders of the particular country.
Fundamentally, investors continue to sell the Yen as things have become more certain than before the meeting. We also know about the hawkish comments from Janet Yellen which is strengthening the Greenback against a bucket of other currencies and ultimately underpinning the bullish momentum in the USD/JPY.
Let me draw your attention towards the technicals side. At the moment, the RSI is holding in an overbought territory along with the candlesticks above the 50 periods EMA. However, the point to note is the double top resistance at $114.490 that can trigger a selling in the pair.
From a trading point of view today, I would recommend you guys to keep your selling position below $114.500, having placed a take profit around $114.150. The stop loss needs to be above $114.600, keeping in mind that we are only looking to capture a retracement while the trend is bullish.