While the U.S. dollar weakened against most peers Wednesday, the euro continued its slide and dropped below 1.07. Whether this downside break proves to be sustained remains to be seen and may hinge on today's economic reports and Federal Reserve Chair Janet Yellen's testimony. Yellen will be addressing Congress for the first time since Trump's victory and she is likely to be asked if fiscal stimulus under Trump could affect the outlook. While Yellen might be unable to give a clear answer on the future outlook, she is likely to talk about the current outlook which is largely positive.
A December rate hike is almost completely priced in and all the market needs is the confirmation from Yellen. Apart from the December outlook, traders should pay close attention to any revision to future hike projections which will be market-moving. The hearing begins at 15:00 UTC (10:00 a.m. EST).
Before Yellen's testimony the release of the U.S. Consumer Price Report at 13:30 UTC will be worth watching and may positively affect the USD.
While the main focus is on the U.S. dollar, Eurozone Consumer Prices are scheduled for release at 10:00 UTC, but this report is not expected to have a major impact on the euro. From a technical perspective we see a next support around 1.06 from where some pullbacks may occur. In case of a break below 1.0580 a next lower target should be at 1.0520. Those who are looking to buy the dollar on dips may wait for pullbacks towards 1.0740 and 1.08.
The pound sterling traded range-bound between 1.25 and 1.24. The cable still faces a crucial support at 1.2350 and we will therefore wait for a sustained break below that level in order to expect further losses. On the upside we see an important resistance around 1.2550. U.K. Retail Sales are due for release at 9:30 UTC and may affect the price action in the GBP/USD.
Here are our daily signal alerts:
EUR/USD
Long at 1.0730 SL 25 TP 20, 40
Short at 1.0665 SL 25 TP 20, 40
GBP/USD
Long at 1.2470 SL 25 TP 20, 40
Short at 1.2385 SL 25 TP 20, 40
We wish you good trades and many pips!
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