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Forex pairs in this Article » EUR/USD
FXStreet (Guatemala) - Stephen Gallo, European Head of Currency Strategy at BMO Capital noted that Yellen’s testimony may be tipped towards a rather ‘dovish’ or ‘risk supportive’ set of comments, given recent events.

Key Quotes:

"‘Risk-on’ generally dominated this morning, and the JPY was broadly weaker (so was USD vs. EM). This was ahead of Yellen’s testimony later today, where the outcome may be tipped towards a rather ‘dovish’ or ‘risk supportive’ set of comments, given recent events."

"The AUD was firm, following strong Australian house price data overnight".

"The EUR was also firm, as tightness at the very front-end of the curve added support again. With today being the last day of the ECB’s first maintenance period of 2014, we look for some of this pressure to gradually subside a bit."

"USD/CAD made its best attempt at a breach of 1.110 since last Thursday during the Asian session (1.109 high), with comments from the BoC late on Monday weighing on the CAD. Since the release of January’s housing data yesterday, the tone in USD/CAD has been a healthier one, with some of that improvement sticking around for about the first-half of the London morning. It will be a good sign if the pair can close above 1.107 today, and that will leave us looking for a break of 1.110 over the balance of the week."

"Tactically, we are still reluctant about adding to our medium-term long USD/CAD exposure below 1.111/20. There should be limited appetite to trade substantially above 1.108 ahead of Yellen, and we will need to see 1.100-1.102 first before buying the pair in the event of a ‘dovish’ outcome today."

"All in all, a close today at 1.107 and above and a good retail sales report from the US tomorrow will make us more confident of achieving 1.111/20 by Friday. Otherwise, we remain cautious about topside exposure."
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