Global macro overview for 13/07/2017

Global macro overview for 13/07/2017:

During her latest speech in the front of US Congress, the Federal Reserve Chairperson Janet Yellen was not hawkish enough to move the US Dollar upward. Yellen has nothing extraordinary to say and her dovish point of view that she held since the June FOMC meeting was reiterated again. The main focus of Yellen speech was on inflation, which according to her is below the target, and has recently dropped, so its future developments remain uncertain. This articulated "uncertainty" hit the US Dollar most strongly, as it is part of the recent hesitation of FED members' in relation to the third rate hike before the end of the year. On Tuesday we heard from Brainard and Harker, that it will be easier for the FOMC consensus to start the process of reducing the balance sheet probably already in September. There is still more uncertainty and more doubts are regarding the December interest rate hike. According to the FedWatch tool by CME Group, the probability of interest rate hike in September is at the level of 8.1% and a probability of an interest rate hike in December just decreased from 70% to 47%.

Today's is the second day of Jannet Yellen testimony in front of the US Congress and two more FOMC voting members, Charles Evans and Lael Brainard will present their comments regarding the monetary policy. Without more hawkish statements, there is no reason to expect the USD to gain today especially when US bond yields do not rebound after Wednesday's decline.

Let's now take a look at the US Dollar technical picture at the H4 timeframe. Despite the oversold market conditions, the bulls were unable to break out substantially above the technical resistance at the level of 95.91. There is still a chance for a Double Bottom pattern, but any breakout below the level of 95.47 will invalidate this possibility.

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