Janet Yellen will be delivery her semi-annual testimony in front of congress, a 2-day QA session, that can provide some clues as to when the next rate hike will be. Or not – if Yellen purposely remains unclear. Let’s take a look at USD-crosses, GBP/USD, AUD/USD, and NZD/USD, in consolidation that might find direction after the next couple of days.
The GBP/USD has been bullish and made a fresh high on the year before consolidating. Without BoE confirming a 2014-rate hike, the GBP was unable to push higher, and the GBP/USD consolidated further. After the Janet Yellen event risk, will GBP/USD be ready for bullish continuation, or will it enter a significant period of consolidation. In 2014 and late 2013, these consolidation periods have lasted about 1.5 months and ranged about 300-350 pips. The AUD/USD is also consolidating after a fresh high on the year. It is in a triangle, which should break after Janet Yellens 2-day QA event. Finally, the NZD/USD is the strongest of these 3, and also is coming off a fresh high on the year. It looks poised to break higher toward 0.93, barring a very hawkish Janet Yellen, one that puts the rate hike time-line in the first half of 2015.
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