17 Mar 2015
What if the Fed disappoints? – MP
FXStreet (Barcelona) - With markets trading cautiously ahead of Fed meet, Dean Popplewell, Director of Currency Analysis at MarketPulse, notes that if Fed maintains ‘patient’, the dollar index might fall back to 92.
Key Quotes
“Market positioning for the USD remains stretched on the long side, and tomorrow’s event risk is that those longs may panic to get out if Ms. Yellen decides that “patience” is needed.”
“Technical analysts have been arguing that the Dollar Index spot exchange rate (99.63) happens to show a serious rally over the past 12-months, but with very few profit taking dips seen as the pair approaches massive resistance near 102.”
“In other words, if the Fed Chair succeeds in giving the “bearish” cue, there will be plenty of room for the most dominant of currency’s to fall with gusto (92 and then 89).”
“It’s neither impossible nor impractical for the Fed to keep the status quo for the time being. Nevertheless, it’s been reason enough for some short EUR/USD speculators to trade cautiously ahead of the Fed concerned rates may be held ‘lower for longer.’”
“The slight narrowing of US/Bund spreads has been influencing some speculators to pare their EUR/USD (€1.0600) shorts.”
“The two-year US/German spread has narrowed just -6pbs from the trend wide – it’s still +50bps from October. Expect traders to focus on market corrections while the techies remain very bearish.”
Key Quotes
“Market positioning for the USD remains stretched on the long side, and tomorrow’s event risk is that those longs may panic to get out if Ms. Yellen decides that “patience” is needed.”
“Technical analysts have been arguing that the Dollar Index spot exchange rate (99.63) happens to show a serious rally over the past 12-months, but with very few profit taking dips seen as the pair approaches massive resistance near 102.”
“In other words, if the Fed Chair succeeds in giving the “bearish” cue, there will be plenty of room for the most dominant of currency’s to fall with gusto (92 and then 89).”
“It’s neither impossible nor impractical for the Fed to keep the status quo for the time being. Nevertheless, it’s been reason enough for some short EUR/USD speculators to trade cautiously ahead of the Fed concerned rates may be held ‘lower for longer.’”
“The slight narrowing of US/Bund spreads has been influencing some speculators to pare their EUR/USD (€1.0600) shorts.”
“The two-year US/German spread has narrowed just -6pbs from the trend wide – it’s still +50bps from October. Expect traders to focus on market corrections while the techies remain very bearish.”