US dollar Exchange Rates: USD Benefits from Geo-Political Tensions, Outlook Turns Positive
- Written by: Gary Howes
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With geo-political tensions on the rise it is the US dollar exchange rate complex that is today seeing the bulk of investor interest.
US Dollar Exchange Rates Today: We are seeing the US dollar rise across the board as the geo-political risk posed by Ukraine steps up a gear. After days of tight ranges we are finally starting to see movement.
In addition, while US durable goods orders provided the data highlight on Wednesday, Fed Chair Yellen's rescheduled testimony to the Senate today will likely attract the lion's share of interest.
A look at the US dollar exchange rate complex shows:
The US dollar is however seeing losses against those two ultimate safe haven destinations - CHF and JPY.
"Risk aversion clearly hit the forex market at the start of European trade today after tensions between Russian and Ukraine escalated sparking rallies in the Japanese yen and the Swiss franc," says Boris Schlossberg at BK Asset Management.
Traders will be keen to hear whether Ms. Yellen will remain on track with the QE taper or whether she may hint that the Fed will be open to maintaining the stimulus longer in order to help US economy to recover from the recent weather woes.
"Any suggestion of delay in the taper could send the dollar plunging against the yen with pair possibly testing the 101.00 level in response to such a move," warns Schlossberg.
Pound dollar outlook: GBP/USD predicted higher
Turning to the technical outlook for the pound dollar exchange rate, Luc Luyet at MIG Bank says:
"GBP/USD needs to break the resistance at 1.6742 to confirm a resumption of the underlying uptrend. Another resistance stands at 1.6823. Supports can be found at 1.6584 and 1.6426.
"In the longer term, the technical structure favours a bullish bias as long as the support at 1.6220 (17/12/2013 low) holds. The decisive break of the resistance at 1.6668 opens the way for a move towards the major resistance at 1.7043 (05/08/2009 high). However, a sustainable move above that level is unlikely in the next few weeks."
Euro dollar outlook: EUR/USD predicted lower
Concerning the technical outlook for the EUR/USD, Luc Luyet at MIG Bank says:
"EUR/USD has broken the support at 1.3692, validating a short-term double-top with an implied target at 1.3611.
"Monitor the hourly support at 1.3657 (see also 38.2% retracement). Another support lies at 1.3562. An hourly resistance now stands at 1.3702 (21/02/2014 low). Another resistance is at 1.3773.
"In the longer term, we favour a broad horizontal range between 1.3296 (07/11/2013 low) and 1.3893 (27/12/2013 high). The recent weakness and the overbought conditions suggest that downside risks currently outweigh upside potentials."
