The US Dollar is on the rise, driven by higher US yields. Powell’s speech on Friday looms large in the market. Traders eye key tech levels on EUR/USD and GBP/USD amid the dollar’s recovery.
In this article, we analyze the recent surge in the US Dollar, measured by the DXY index. Thursday’s boost came from a rebound in US Treasury yields, fueled by San Francisco Federal Reserve President Mary Daly’s remarks.
Daly’s strong stance contrasts with more cautious colleagues, signaling a divide between doves and hawks in the FOMC. Powell’s speech at Spelman College on Friday is crucial to clarify the central bank’s stance on monetary policy.
Traders should closely monitor Powell’s comments for a potential impact on US yields. Hawkish remarks could push rates higher, extending the dollar’s rebound. Conversely, a lack of resistance to dovish market expectations might drag yields down, affecting the greenback.
Turning to the technical analysis of EUR/USD, the pair faced a second consecutive day of losses due to weaker-than-expected Eurozone inflation data. If the pullback continues, the short-term ascending channel at 1.0890 may provide support.
Bulls regaining control could lead to a resumption of the uptrend, targeting 1.0960 and potentially reaching November’s peak and horizontal resistance at 1.1080. For a comprehensive outlook on the euro, traders can request a free copy of our latest forecast.
Shifting focus to GBP/USD, the pair retreated on Thursday but held above technical support at 1.2590. This pullback may signify a temporary pause in the near-term uptrend, with the bullish outlook intact if 1.2590 holds.
GBP/USD could resume its upward trajectory, aiming for 1.2720 and potentially reaching 1.2800 on continued strength. However, a breach below 1.2590 may lead to a drop towards the 100-day simple moving average and 1.2460 in case of sustained weakness.
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Conclusion:
In conclusion, understanding market dynamics is key. Stay informed about Powell’s speeches and tech levels for successful trading.
