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.

Free Trading Guides
EUR/USD
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
Oil - US Crude
Bearish
Wall Street
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
Gold
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
GBP/USD
Bullish
USD/JPY
Bearish
More View more
Real Time News
  • Heads Up:🇯🇵 JPY Tankan Small Non-Manufacturing Outlook (1Q) due at 23:50 GMT (15min), Actual: N/A Expected: -15 Previous: 1 https://www.dailyfx.com/economic-calendar#2020-03-31
  • Heads Up:🇯🇵 JPY Tankan Large All Industry Capex (1Q) due at 23:50 GMT (15min), Actual: N/A Expected: 2.5% Previous: 6.8% https://www.dailyfx.com/economic-calendar#2020-03-31
  • Heads Up:🇯🇵 JPY Tankan Large Manufacturers Outlook (1Q) due at 23:50 GMT (15min), Actual: N/A Expected: -15 Previous: 0 https://www.dailyfx.com/economic-calendar#2020-03-31
  • Heads Up:🇯🇵 JPY Tankan Large Non-Manufacturing Index (1Q) due at 23:50 GMT (15min), Actual: N/A Expected: 3 Previous: 20 https://www.dailyfx.com/economic-calendar#2020-03-31
  • Heads Up:🇯🇵 JPY Tankan Large Manufacturing Index (1Q) due at 23:50 GMT (15min), Actual: N/A Expected: -10 Previous: 0 https://www.dailyfx.com/economic-calendar#2020-03-31
  • Heads Up:🇯🇵 JPY Loans & Discounts Corp (YoY) (FEB) due at 23:50 GMT (15min), Actual: N/A Expected: N/A Previous: 2.2% https://www.dailyfx.com/economic-calendar#2020-03-31
  • RT @FirstSquawk: Chinese Officials Are Actively Pushing For Tariffs Cuts And Removal Of Trade Barriers To Help The Global Economy Cushion T…
  • This session starts in about 30 min, today's webinar will revolve around major benchmark stock indexes to see how positioning could impact the road ahead with key technical levels in focus. Signup below! https://t.co/4br2H1Uz6p
  • In this session, Currency Analyst @ddubrovskyFX discusses traders' positioning as a key element of market analysis to determine the prevailing and future price trends. https://www.dailyfx.com/webinars/998956395
  • The $USD may return to the offensive as markets flee to cash amid fears of deep global recession thanks to the still-raging #coronavirus outbreak. Get your US Dollar update from @IlyaSpivak here: https://t.co/g1us4ZbYR5 https://t.co/tLFeaAwRqE
US Dollar Waits on New Fed Chair Powell - Expectations are Low

US Dollar Waits on New Fed Chair Powell - Expectations are Low

2018-02-27 13:05:00
Christopher Vecchio, CFA, Senior Strategist
Share:

Talking Points

- New Fed Chair Jerome Powell is widely expected to express continuity of the monetary policy trajectory set in place by former Chair Janet Yellen.

- Markets are pricing in less than a 1% move in EUR/USD, GBP/USD, USD/JPY, and Gold around today's testimony.

- Retail trader sentiment suggests a mixed trading environment for the US Dollar.

Volatility is back. It's time to review the Traits of Successful Traders series to stay grounded with the tenets of risk management.

The US Dollar (via DXY Index) hasn't move all that much in the past five trading sessions (including today), as price continues to stall below two key trend levels: the downtrend from the December 18, January 11, and now February 21 highs; as well as the descending channel top off of the January 17 and February 8 highs.

Price Chart 1: DXY Index Daily Timeframe (August 2017 to February 2018)

US Dollar Waits on New Fed Chair Powell - Expectations are Low

As such, we're still of the mindset that a bottom can't be called until the DXY Index clears out 91.01, the former 2017 low and swing highs from mid-January. But if traders are looking for new Fed Chair Jerome Powell to be the catalyst for such a development, they may walk away disappointed.

In fact, taking a look at measures of overnight volatility, expectations for a significant move today are low. EUR/USD's implied move today is for 0.66% or 81-pips; GBP/USD's is for 0.69% or 96-pips; USD/JPY's is for 0.76% or 81-pips; and Gold's is for 0.92%, or $10.93. Traders are clearly heading into the Powell testimony today with low expectations for anything significant at all to be revealed.

Table 1: Fed Funds Futures Implied Rate Path

US Dollar Waits on New Fed Chair Powell - Expectations are Low

As such, when the Powell testimony is released at 8:30 EST/13:30 GMT, and when he sits down in front of the House Financial Services Committee, we'll be keeping an eye on rates markets. For now, Fed funds futures are pricing in three rate hikes this year; should Powell offer up some more hawkish commentary, only then would we expect to see a significant reaction.

In the near-term, Powell is being framed as Yellen 2.0; expect talk of continuity of monetary policy and rate hikes proceeding at a gradual pace - essentially repeating what was said during the January FOMC meeting, as revealed in the minutes release last week.

Read more: FX Markets Eye Eurozone and US Inflation, US and Canadian GDP

In an environment where volatility has picked up, it is absolutely imperative that traders adjust their risk management perspective. If you haven't yet, it's the right time to review the Traits of Successful Traders series in order to become reacquainted with the tenets of risk management.

--- Written by Christopher Vecchio, CFA, Senior Currency Strategist

To contact Christopher, email him at cvecchio@dailyfx.com.

Follow him in the DailyFX Real Time News feed and Twitter at @CVecchioFX.

To receive this analyst’s reports, sign up for his distribution list.

Don’t trade FX but want to learn more? Read the DailyFX Trading Guides.

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

DISCLOSURES

News & Analysis at your fingertips.