Forex Forecast and Technical Analysis
Yellen destroy future of % rates expectation Dollar started to fall at past week Friday, after Yellen words, that before to continue to increase % rate Fed need to see positive rising of CPI and NFP to Fed target. Her words was against hawkish mood of other Fed members, who tells that % rate will be increased in the march. And Trump happy because of this Before Yellen words, market already included % rates rising in march in the price, when EU was traded on 1.0500. And then, Yellen words created a fear, that next % rates can not to be increasing so far, as market is expecting… Also this situation is well correlated with Trump desire for dollar falling. Dollar falling and will continue to 1.0800 or till March Fed % rate Trump didn’t said anything about his new tax policy, that create warnings about its realization at all or in way that Trump planned before. Because of this, market optimism is became low and as you remember after Trump election market is already included in price some part of that optimism… So now, any disappointing with future of tax policy will hurt dollar very much.
Main driving force of market on this week will be speech of Donald Trump in parliament on February 28, on that he will say about future of his new tax policy. On the other hand, the second factor of market force is election race in France, that made pressure on euro. But Mari le Pan is staying behind two other candidates, with big gap, that create optimism for euro.
Yesterday "FOMC Meeting Minutes" news not brought anything new, so market will be waitiing for Trump new tax policy news at the next week, february 28. At present time dollar is trading on resistance and we can expecting good correction with its weakness. This week we already do not have any important news, so technical conditions is saying only for range trading. Today we have "Crude oil inventories", that will bring good trend to this market.
This week dollar will be trading sideways between 1.0520 – 1.0780, because of a lack of important news. Now market is waiting for Trump speech about future of new tax rates for business, that he will have on 28 february. On Wednesday we have “FOMC Meeting Minutes”, that will predict future of Fed % rate, but as Yellen told at previous week a twice in congress that: “Futures of new business tax rates is now most important for Fed and we need to include them in our future policy”.
Perhaps, the market will be very difficult to determine the direction of the trend, if it ever will be. As Trump essentially squeezes the dollar sideways, at the same time strengthen dollar with taxes decreasing, but weakening it with desire to reduce the overall dollar rate and termination of % rates raising. At the same time, with tax cuts, FRS can begin QE to support the US economy, which would reduce the dollar. Euro is very negative because politics risks and will also continue its QE. The euro and the dollar markets are becoming too complicated for analyze and trade, so it is best to look at the alternative pairs/markets, such as: eur/gbp (where gbp power is already higherthen in euro), gold and agriculture markets. If on the next week Yellen will not say anything positive about strengthening of % rate, or her words will be neutral, market will continue to stay sideways awaiting of Trump words about future of US business tax decreasing.
To the end of February I’m expecting weak dollar and next prices: - EUR/USD on 1.1220 (now 1.0750) - GBP/USD on 1.2750 (now 1.2460) - GOLD 1290 (now 1235) What the reason of this prices?
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