Despite Fed Members Positivity, Traders Hesitant Regarding USD
The U.S. dollar closed the week relatively unchanged against the Australian and the Canadian dollar, while it ended up higher against the euro and the Swiss franc and lower against the rest of the G7. Putting aside the fact that the U.S. Economic Data had been published the previous week and the comments of the FOMC members were all positive for the U.S. dollar, the traders are still hesitant to buy it. This situation can be best explained by expectations. There are 3 rate hikes expected within 2017 from the FOMC, however the traders do not see the first hike happening on the next Fed policy meeting. Fed Fund futures give a 36% chance of a rate hike in March and 63% of a rate hike in May.
USD Vs G7 Weekly Change Chart
There is a busy week ahead with major economic releases. Monday’s European session is quiet with no major economic updates, while during the U.S. session January’s Core Durable Goods Orders are expected to remain steady at 0.5%. Moreover, during the U.S. session we are expecting the release of U.S. Pending Home Sales which are predicted lower at 0.8%, only half of the previous release.
On Tuesday the Q4 U.S. Gross Domestic Product is expected to remain steady at 2.1% while February’s CB Consumer Confidence Index is expected to slightly drop by 0.8 units at 111. The highlight of the day and of the week will be President Trump’s speech. The President will deliver a speech to a joint session of Congress where he is expected to reveal his “phenomenal” tax reform plans; we will make sure to watch the speech and the volatility on the U.S. dollar.
During Wednesday’s Asian session we are looking for the Australian Q4 GDP which is expected higher than the previous quarter while the monthly Chinese Manufacturing PMI is expected relatively unchanged.
From Europe, there will be releases of February’s German and British Manufacturing PMI which are both expected relatively steady at 57 units and 56 units respectively. From the U.S., we get the ISM Manufacturing PMI which is again expected to remain unchanged at 56 points. The spotlight of the day will be the Bank of Canada Interest Rate decision where the policymakers are expected to keep rates at the current figure of 0.5%.
On Thursday there is the British construction PMI of February release with expectations holding stable at 52.2 while later during the European session the European CPI is projected at 2% against January’s 1.8%. Furthermore, the Canadian GDP of the 4th quarter of 2016 will be published at 13:30 GMT and the forecasts lay at 0.2% against the 0.4% figure of the previous quarter.
The last day of the week reveals February’s British Services PMI at 09:30 GMT and the monthly U.S. ISM Non-Manufacturing PMI at 15:00 GMT. The NFP report will be released next week, on March 10th. However, there is another significant event on this Friday since Fed Chairwoman Janet Yellen will deliver a speech.
EUR/USD Looking at EUR/USD 4-hour chart, an uptrend is still prevailing, while the price had an unsuccessful trial to break the trendline to the upside. The price is still trading below the triple SMAs as it attempts to break SMA50 to the upside at the time of writing. Both MACD and RSI are near their neutral levels while ADX indicates no clear direction. Those are signs that the price is consolidating and the next few hours would be critical for the pair. The resistance level of 1.06 is considered to be a strong level, upon penetration of which we are looking at 1.062, 1.064 and 1.067. To the downside, the critical supports are near 1.055, 1.053 and the psychological level of 1.05.
EUR/USD H4 Chart
GBP/USD The British pound is trading near the significant support level of 1.24 which has been tested many times within the last few days. The pair is trading below the SMAs at the time of writing while RSI and MACD indicate bearish signals with Average Directional Index being on negative territories as well. Upon a downward penetration of the psychological level of 1.24, the next valid support level to be reached is 1.235. To the upside, the valid resistance levels are near 1.2475 and 1.251.
GBP/USD H4 Chart
AUD/USD The Aussie is trading on a slow uptrend with minor price swings. RSI and MACD are near their equilibrium levels indicating a neutral momentum while ADX signals negative directional movement. If the price breaks the upward trendline, then the target becomes the support of 0.7645 and upon penetration of it we are looking at the next valid support of 0.76. On the upside, the targets are near the resistances of 0.7695 and then 0.773.
AUD/USD H4 Chart
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