The theme for yesterday’s trading was to see where the markets were going to move post Yellen’s comments after the Jackson Hole meeting. We saw broad strength from the dollar across all major pairs after she left the possibility of a rate hike in September on the table.
Dean's Daily FX Update – 30 August 2016
Dean still believes this is unlikely and any hike will be moved to sometime next year especially with the US Presidential Elections in November.
It looked like a bit of profit taking from traders in the EURUSD yesterday. A bit of consolidation was evident in this FX pair around the 1.1170 level after trading down to 1.1159. This our previous 61.8% Fibonacci level. Dean is watching some divergence which is emerging and one of his favourite tools to indicate a change in trend.
For Sterling, Dean has inserted a possible level of support around the 1.3060 level where we have seen multiple bounces over the past few weeks. The market is around this level now so will be interesting to see how price reacts.
The AUDUSD has overshot the levels Dean put in yesterday and he is going to be watching the 50% Fib level at 0.7624 to see if the market can get back up there. It had been a level of support going back to May so may prove to be a key level again.
The Kiwi could be more vulnerable than the rest and more downside is expected. The yearly highs were not broken at 0.7310 despite numerous attempts. Dean will be looking for it to move below the 61.8% Fib before getting interested in taking a long position.
The CAD is heavily overbought and following some of the moves in the oil price and general USD strength.
The rand is starting to run out of some momentum but the overhang of the Pravin Gordhan saga and the political landscape seems to be shaping this forex pair. Dean not prepared to stick his neck on the line and fight Zuma and the Hawks on this one just yet.
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