News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
Oil - US Crude
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Real Time News
  • GDP (Gross Domestic Product) economic data is deemed highly significant in the forex market. GDP figures are used as an indicator by fundamentalists to gauge the overall health and potential growth of a country. Learn use GDP data to your advantage here: https://t.co/Yl9vM7kO6a https://t.co/otJwnuR7qe
  • The Federal Reserve System (the Fed) was founded in 1913 by the United States Congress. The Fed’s actions and policies have a major impact on currency value, affecting many trades involving the US Dollar. Learn more about the Fed here: https://t.co/ADSC4sIHrP https://t.co/s4lZWdJoXV
  • The US Dollar Index traded higher last week, sustaining its broader uptrend. Conflicting technical signals urge caution, but the directional bias remains skewed to the upside. Get your weekly USD technical forecast from @FxWestwater here: https://t.co/jcwhcsUBEN https://t.co/tKrlrRZlZn
  • Technical analysis of charts aims to identify patterns and market trends by utilizing differing forms of technical chart types and other chart functions. Learn about the top three technical analysis tools here: https://t.co/KDjIjLdTSk https://t.co/MGy9OTXpUI
  • The Australian Dollar still remains vulnerable as it extends losses against its major counterparts. What is the road ahead for AUD/USD, AUD/JPY, AUD/NZD and AUD/CAD? Get your AUD technical forecast from @ddubrovskyFX here: https://t.co/ph20zFv4qS https://t.co/v4g9ATf4rr
  • The ISM manufacturing index plays an important role in forex trading, with ISM data influencing currency prices globally. Learn about the importance of the ISM manufacturing index here: https://t.co/Xr3xtoFpZy https://t.co/De69mTseZN
  • Take a closer look visually at the most influential global importers and exporters here: https://t.co/G58J1dg6y3 https://t.co/D7AeTM5OpH
  • EUR/USD tumbled last week on the day of the ECB’s latest policy announcement, and that weakness is set to continue this week as a flood of major Eurozone economic statistics is released. Get your weekly Euro forecast from @MartinSEssex here: https://t.co/9B4rJnzWuz https://t.co/ENF3xlkuyP
  • Trading bias allows traders to make informative decisions when dealing in the market. This relates to both novice and experienced traders alike. Start learning how you may be able to make more informed decisions here: https://t.co/rz7fqi8ZEe https://t.co/Gps2Xp32h9
  • Greed is a natural human emotion that affects individuals to varying degrees. Unfortunately, when viewed in the context of trading, greed has proven to be a hindrance more often than it has assisted traders. Learn how to control greed in trading here: https://t.co/kODPAfJE79 https://t.co/hftCEho1lM
After Yellen, the US Dollar May be in Serious Trouble

After Yellen, the US Dollar May be in Serious Trouble

Christopher Vecchio, CFA, Senior Strategist

Talking Points:

- USDOLLAR Index on precipice of larger technical breakdown.

- EUR/USD, USD/JPY near breakout points; USD/CAD, NZD/USD confirming emerging theme.

- As USD slips, retail crowd positioning is beginning to turn as well.

If the Federal Reserve's March policy meeting wasn't a big enough hint in its own right, then yesterday's speech by Fed Chair Janet Yellen should have gotten the message across loud and clear: the Fed's rate liftoff will be gradual, and that accommodative monetary policy remains in place.

Markets have certainly gotten the message. While some non-voting FOMC members have called for a rate hike as soon as April, market participants know whose opinion matters most. With the Fed Chair issuing clear concern over the state of the "global economy" - she mentioned it nine times over the course of her remarks - investors are taking it as a sign that, with so many economic concerns in each corner of the globe, the Fed won't be tightening policy with any expedience.

Table 1: Fed Funds Futures Contract Implied Probabilities: March 30, 2016

Fed funds futures implied probabilities

Following Fed Chair Yellen's remarks, market participants are dismissing the hype that April is a "live meeting," and moreover, that given upcoming geopolitical risk (UK elections, EU-UK referendum "Brexit", US elections, emerging security concerns in Europe), a rate hike in the first half of the year is unlikely altogether (just 28%). Per the Fed funds futures contract, the first hike is expected in November 2016 - although with the US election around the corner, it seems highly unlikely that the Fed would act at a non-press conference meeting.

How far we've come. In December, the Fed said it was looking to raise rates four times this year. Yesterday, Fed Chair Yellen made it seem like the probability of multiple rate hikes this year is dwindling. The US Dollar is all the worse for the wear; deflating interest rate expectations have undercut the greenback's prime source of strength over the past several years (as was to be expected - we didn't think the Fed's hiking cycle would help the US Dollar).

As market participants come to terms with what the Fed may or may not do, there is certainly a sense of 'relief' out there: the US Dollar is falling across the board; US bond prices are rallying; and US equities are rallying. What relief? That the Fed is going to be keeping rates low for much longer than previously understood.

If the Fed Chair has just potentially given the green light to further US Dollar weakness, the charts should reflect it. Given the standing of the USDOLLAR Index, and a closer look at the individual components, it seems necessary to issue further concern about the US Dollar - more than indigestion may be due ahead.

Chart 1: USDOLLAR Index Daily Chart (February 2015 to March 2016)

After Yellen, the US Dollar May be in Serious Trouble

As the USDOLLAR Index approaches the October 2015 and March 2016 swing lows around 11840/50, we're drawn to one component in particular.

Chart 2: EUR/USD Daily Chart (February 2015 to March 2016)

After Yellen, the US Dollar May be in Serious Trouble

EUR/USD is quickly approaching its March high, and in context of the triangle that may have been forming since October 2015, a breakout to the topside may be due. For a full technical review of EUR/USD, as well as the USDOLLAR Index, GBP/USD, AUD/USD, USD/JPY, USD/CAD, and NZD/USD, please watch the video above.

Read more: EUR/USD Stuck in No-Man’s Land Headed into Q2’16; Don’t Discount ’Brexit’

--- Written by Christopher Vecchio, Currency Strategist

To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com

Follow him on Twitter at @CVecchioFX

To be added to Christopher’s e-mail distribution list, please fill out this form

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES