Global macro overview for 28/11/2017

Today, the tag of the day's event was pinned to Jerome Powell's hearing before the Senate Banking Committee of the US Congress. The new Fed Chairperson nominee will present his vision for the post, although he already announced text of his opening statement points to the defense of the status quo. Powell stresses the need to stabilize the labor market and bring inflation to the target. This implies a gradual increase in interest rates (hawkish) and a reduction in the balance sheet total( even more hawkish), but with a precarious future flexibility is mandated. This suggests that the transitional period after the change in the Fed should be mild. On the other hand, nothing is said about the shape of politics in the long run. For the market, the number of increases in 2018 and 2019 remains open regardless of what the FOMC forecasts say. The market will be interested in Powell questions, which may reveal more about how far he wants to drive interest rates.

Let's now take a look at the US Dollar Index technical picture at the H4 time frame. The market has bounced from the technical support at the level of 92.54 and currently is testing the nearest resistance at the level of 93.06. The oversold trading conditions and a clear bullish divergence support the temporary corrective pull-back scenario. In a case of a further breakout higher, the next resistance is seen at the level of 93.39.

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