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USDOLLAR to Threaten 2014 Range on Dovish Fed- USDJPY Eyes 100.00

David Song

Talking Points:

- USDOLLAR Outlook Hinges on Fed Testimony; January Low (10,619) in Focus

- Japanese Yen Benefits from Risk Aversion; Lower High in Place?





Daily Change (%)

Daily Range (% of ATR)

DJ-FXCM Dollar Index







Forex_USDOLLAR_to_Threaten_2014_Range_on_Dovish_Fed-_USDJPY_Eyes_100.00_body_Picture_3.png, USDOLLAR to Threaten 2014 Range on Dovish Fed- USDJPY Eyes 100.00

Chart - Created Using FXCM Marketscope 2.0

  • 2014 Range in Focus Ahead of Humphrey-Hawkins Testimony
  • Bearish RSI Momentum Highlights Risk for Fresh Lows
  • Interim Resistance: 10,753 (23.6 expansion) to 10,759 (61.8 retracement)
  • Interim Support: 10,561 (100.0 extension)- Closing Basis





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The Dow Jones-FXCM U.S. Dollar Index (Ticker: USDollar) remains under pressure ahead of the Fed’s Humphrey-Hawkins Testimony as the dismal Non-Farm Payrolls (NFP) report dampens bets of seeing another $10B taper at the March 19 meeting.

Indeed, the greenback may face additional headwinds over the near-term should the Federal Open Market Committee (FOMC) implement a more dovish twist to its forward-guidance or even opt for a smaller series of reductions in its asset-purchase program, but the majority may look to stay on its current course as the unemployment rate approaches the 6.5 percent threshold.

With that said, the USDOLLAR may preserve the 2014 range should central bank Chair Janet Yellen stick to the script from the January 29 meeting, but a meaningful shift in the policy outlook may spark fresh lows in the greenback as it dampens bets of seeing the Fed halt Quantitative Easing (QE) later this year.

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Forex_USDOLLAR_to_Threaten_2014_Range_on_Dovish_Fed-_USDJPY_Eyes_100.00_body_ScreenShot068.png, USDOLLAR to Threaten 2014 Range on Dovish Fed- USDJPY Eyes 100.00


Forex_USDOLLAR_to_Threaten_2014_Range_on_Dovish_Fed-_USDJPY_Eyes_100.00_body_Picture_1.png, USDOLLAR to Threaten 2014 Range on Dovish Fed- USDJPY Eyes 100.00
  • Stalls at Former Support; RSI Appears to Turning at Trendline Resistance
  • Interim Resistance: 103.30 (23.6 retracement) to 103.50 (100.0 expansion)
  • Interim Support: 100.50 (61.8 expansion) to 100.70 (61.8 expansion)

The greenback advanced against three of the four components, led by a 0.30 percent decline in the Australian dollar, while the Japanese Yen bucked the trend, with the USDJPY pulling back from former support zone.

Given the strong correlation between the JPY and the S&P 500, a further downturn in market sentiment may ultimately produce a more meaningful move back towards trendline support, and we will continue to watch the downside targets this week as the USDJPY appears to be carving another lower high.

In turn, we will keep a close eye on the bearish RSI momentum for confirmation as well as conviction for a further decline in the USDJPY, and the pair remains at risk for a larger correction as market participants scale back their appetite for risk.

--- Written by David Song, Currency Analyst

To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong.

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