Janet Yellen just wrapped up her first of the 2-day congressional testimony. There was no indication on the Fed’s interest rate time-line. Nonetheless traders are buying up the USD. Let’s take a look at the USD/JPY, EUR/USD, and GBP/USD and the USD Index:
The USD/JPY is in the middle of a falling channel that was started in June. If USD/JPY continues to drift higher, it will test the channel resistance around 102, which is a key level in it of itself. A push above 102 tomorrow can expose a bullish reversal in the short-term, within the context of the 2014-consolidation mode. A hold below 102 should extend June’s bearish trend, and challenge the 100.75-100.85 lows on the year. The EUR/USD was bearish heading into the event risk, and shows signs of bearish continuation. The pair looks poised to test the 1.35 handle down to the 1.3475 low on the year. GBP/USD was bullish, and extended to a new high on the year after hot inflation data. As the USD strengthens across the board, GBP/USD is pulling back a bit. But it remains bullish if it can hold north of 1.71. The USDX shows that the current rally could be the C leg of an ABC correction. 80.70 will be a key resistance tomorrow. Also, if price dips after a rally, the 80.35 pivot will be key. If price can hold above 80.35, the USDX could be back in bullish continuation mode.
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