Dollar affected by Fed speakers, Euro’s Upside pressure has faded, Sterling under pressure

Dollar affected by Fed speakers, Euro’s Upside pressure has faded, Sterling under pressure

Dollar affected by Fed speakers

The Fed announced it raised interest rates for the second time this year last week, and Federal Reserve officials’ speeches started. Dudley’s commentary yesterday suggested that the US central bank will continue on its rate hike path

The dollar was lifted by Dudley’s commentary who considered that improvement in the employment sector would push the inflation towards the Fed’s target.

Charles Evans disagreed with his colleague Dudley. He was more conservative about inflation and said that he prefers to see raising inflation, rather than keeping stable rates. He pointed out that recent data indicates that inflation is suffering to reach 2%, and a new rate hike could be considered near the end of the year and not before.

Fischer and Kaplan are expected to speak today, so the dollar is likely to fluctuate according to the contents of these speeches, but in the long run, economic data will be acting as a guide for investors, especially inflation data and wage rates.

Euro’s Upside pressure has faded

Euro’s is consolidating after pausing the recent uptrend that was in place during the last lone and half month.

The single currency’s weakness of the euro is largely due to broadly strong US dollar and not weakening economic conditions or European data.

Technically, a breach of the support zone at 1.1110 will increase the negative pressure and push the single currency towards 1.1000, but that wave is only seen as a corrective phase. European economic data are strong the inflation rates are good and improving. The new French president promised reforms in the labor sector, if implemented, will have positive repercussions on the European economy and growth in the euro area.

Sterling under pressure

Despite the BOE’s positive outlook on last week’s meeting, the Sterling has not been able to sustain its gains.

It is negatively affected by the dollar’s strength as well as the hard Brexit negotiations.

The internal political concerns, and the formation of the new government is a sample of the internal confusion that will keep pace with the long Brexit negotiations.

The pair is likely to witness sharp fluctuations in the coming period but focus will remain to the downside for the time being. A breach of the support barrier at 12690 will open the way for a deeper decline towards 1.2500 in the near term, only a sufficient rise above 1.2520 would strengthen the possibility of a retest of the 1.3000 level.