AUD/USD: 0.7105
EUR/USD: 1.1285
Markets initially looked on the positive side of Janet Yellen’s testimony to Congress, with stocks and the dollar rallying after she said that she does not expect to have to reverse the rate hike program that the Fed began in December, adding that she thinks there is room to gradually adjust monetary policy given the underlying strength in the US economy, which she expects to continue to pick up in the current quarter. She noted the downside risks as well, and the outcome has seen both stocks and the dollar reversing earlier gains. The Yen in strong on the back of safe haven demand and continues to make new highs. Oil remains under heavy pressure. Today may be another rangebound session as there is little data to provide direction, although Janet Yellen will again appear in front of Congress. The US Jobless Claims will be the highlight from the EU/US. Asia is still closed, as will be Japan today.
AUDUSD remains choppy but currently has an underlying bid tone as it sits just above 0.7100 following the testimony from Janet Yellen. We are sitting right on the 100/200 HMAs, which could prove to be a magnate although, If anything, the momentum indicators now seem to be aligning to point a little higher, so we could yet see a run back to the session high of 0.7125, beyond which would target 0.7138 (61.8% of 0.7241/0.6972) and then 0.7177 (76.4%). Above here would look towards 0.7200 and the trend high at 0.7241, albeit not today I suspect.
Buyers will arrive at 0.7075 and again at 0.7050 (both minor) ahead of the session low at 0.7037. Under here could then see a return to 0.7020 and possibly to 0.7000, ahead of the Tuesday session low at 0.6973. Below here seems unlikely in the next day or two unless there is another steep selloff in the commodity/energy sector, but further targets would then be at 0.6925 (76.4% of 0.6826/0.7240) and then to 0.6900 and lower, towards the trend low at 0.6826.
Economic data highlights will include:
China NY Holiday, Consumer Inflation Expectation..
Jim Langlands
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