USD Consolidating Ahead of Yellen

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June Hike Door is Open, but Don't Expect the FOMC to Walk Through

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.

To contact the reporter of this story, email Fan Yang at fan@forexminute.com
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Fan Yang has been a professional forex trader and analyst since 2007. He specializes in technical analysis and has a Chartered Market Technician designation since 2011. He was the chief technical strategist at CMSFX He was also the founder and chief currency strategist at FXTimes Over the years, Fan has not only been a trader and analyst but also an educator. As a proponent of both technical and fundamental analysis in trading, Fan advocates simplicity and discipline as key factors in making trading decisions when faced with so many "clues" and "signals". Currently Fan Yang is the chief currency analyst and webinar instructor at forexminute.com.