What did Yellen say in her speech? Actually, she said what everyone had expected from her, she tried to calm down markets without harsh statements. The most crucial thing is that she admitted the possibility of more “moderate pace” of increase in rates. Herewith she paid much attention to changing conditions in the world. The Fed’s rhetoric returns to the times preceding December’s increase in rates – everything is under control, but we will orient at incoming data. In fact, it means that the period until next increase in rates can be longer than expected. During the speech dollar has considerably strengthened. Still, this movement was calm and seems to be a reaction to long-awaited event rather than to the content of the Fed head speech. The necessity of correction after dollar’s decrease during previous days has its effect. The return of prices to initial positions by the closure of the day indicates that dollar isn’t ready to renew growth.
This day is the second one of Yellen’s speeches in US Congress. Nothing new is expected, therefore dollar will face no support. Today there isn’t significant economic news either. Dollar’s fall can be renewed today, or at least consolidation will continue at current levels.
We consider yesterday’s movement of EURUSD pair as a correction. Short-term indicators “discharged” and the way is open for further growth. Outlined aims aren’t reached, therefore we still stay in the market, but expectations are shifting to the range 1.1440 now. We recommend pulling protective stop to 1.1150.
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