The US dollar has had a very nice run up since FED Chair Yellen’s comments yesterday spooked the markets into anticipating interest rate hikes sooner than expected. Not only did the dollar rally but interest rates went higher across the curve and equities were sold off.
Prior to the meeting the USD Index looked vulnerable and ready to test the bottom of the current trading range at 79.20. Yesterday’s surprisingly hawkish comments reversed the green backs fortunes (79.40 on the index) and should provide a floor for any retracements lower. Today the USD index got as high as 80.45. This level was a prior support area back on Jan 22nd and then became a resistance level on Feb 25th and 26th. It may be take sometime to get break through that level.
The 80.30-40 area is also dead in the middle (50% fib retracement) of the current trading range of 79.20 – 81.40. Yellen’s comments yesterday was a game changer as far as turning market sentiment towards a higher dollar (and higher interest rates) but at this level I would rather wait for a retracement in the dollar before building any long USD positions.
Categories: News and Commentary