E US Dollar Drops On Yellen’s Dovish Speech

On Monday, we saw that the GBP/USD major was continuing an upward hike, this being considered the direct reaction of last week’s sell-off from the 1.4480 thresholds. Also, in the absence of fresh information regarding the Brexit in correlation with a weak US start, the pound made its point on Monday. The trend went up last week from 1.4051 to meet the real supply at 1.4515, but quickly rebalanced at 1.4055, breaking the key technical resistance line in the four-hour chart at 1.4208 and posting fresh highs in the reversal from 1.4281. 

In the background, the price was supported by a weak tone in the greenback across the board, especially after poor US data was released (mixed results coming from the trade balance part, the personal income/spending index and the inflation measured through the PCE – Personal Consumption Expenditure). The US Pending Home Sales though came out better than expected for the month of February, posting a 3.5% expansion rate against the 3.0% growth in January.

On Tuesday, the USD/JPY pair consolidated its upward trend during the day, with the price biasing around the 110.81 thresholds, but continuing the ascension and posting daily highs around the 113.67 value. Analysts said that the 7-day streak might end due to the markets taking a step back as respect for the US economy and its inflation targets come around, Fed marching toward continuous monetary rate expansion. The weakness of the USD is shifting between the figures in the US economy and the recent hawkish comments of certain Fed members, publicly stating their opinions after the last week’s dovish tone after the FOMC (Federal Market Open Committee) press release. We saw a sharp drop in the dollar yesterday as Janet Yellen’s speech inflicted more dovish tone in the market. The Fed Chair said that the central bank will proceed with caution with regards future rate hikes and the inflation target, explaining that the recent pick-up in core inflation is too young to see if the trend is durable or not.