Janet Yellen inspires USD profit-taking
This pair is more vulnerable to pulling back to 113 than it is in appreciating back to 115. Although the US outlook continues to be bright, investors have once again been tempted into pricing in a sooner-than-expected US interest rate rise. The US economy adding less jobs in October is only going to reaffirm to the Fed that the economy is progressing moderately with rates needing to remain low for some time. Moreover, the US Trade Deficit unexpectedly widening suggests the higher valued USD is now weakening export competiveness. Although the US economy is domestically focused, exports declining will lower economic growth forecasts – providing the Fed with a valid reason to keep rates low.
Both the Stochastic Oscillator and RSI are each pointing sharply downwards after approaching the overbought boundaries, providing further indications this pair is looking to pullback. Any upside moves can find resistance around 114.480, while support can be found at 113.957, 113.510 and 113.230.