Global macro overview for 28/02/2018

Jerome Powell did not say anything during his inaugural speech before the Congress that would undermine the growing confidence among the global investors that his term would be marked by a more decisive normalization of monetary policy. The base scenario for the market is not the expectation of a maximum of three but a minimum of three interest rates this year. With the current discount assuming the probability of a hike in March at the level of 96% and the increase in the cost of money in the year by around 80 bps, the key to the stronger Dollar should be the rhetoric accompanying the tightening and the perception of the target level for the rates. It is also important to believe in the strength of the economy and its resistance to the correction on Wall Street, which guarantees that the Fed will not deviate from the chosen course.

Let’s now take a look at the US Dollar Index technical picture at the H4 time frame. The market has finally managed to broke out above the black trend line around the level of 90.11 after the Powell speech in US Congress. Currently, the bulls are trying to test the technical resistance at the level of 90.59 and possibly break higher towards the next resistance at the level of 90.98. The momentum is still above its fifty level and remains strong, pointing to the north. he nearest support for the price is seen at the level of 90.20.

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