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Overnight, the US dollar outperformed most of its major counterparts following a barrage of hawkish remarks from FOMC officials, as well as comments on infrastructure spending by President Trump before Congress. The dollar rally was triggered by New York Fed President Dudley, who indicated that the case for a rate hike has become “a lot more compelling”. Considering that Dudley usually maintains a neutral tone with regards to policy, these hawkish hints probably came as a surprise to many market participants, and revived some hopes with regards to a March hike. The chorus of optimistic FOMC comments continued with St. Louis Fed President Bullard and San Francisco Fed President Williams, both of which indicated that a near-term rate hike is a considerable possibility. While investors were still digesting these remarks, President Trump stepped up to the rostrum to deliver his first address to Congress. Although the President did not offer much detail on tax reform, he did provide some specifics on infrastructure spending. He said that he will ask Congress to approve legislation that produces USD 1 trillion worth of investment in infrastructure. These comments added extra fuel to the USD rally ignited by Fed policymakers.
USD/JPY surged after it hit support near the key obstacle zone of 111.60 and subsequently, it crushed three resistance (now turned into support) barriers in a row. At the time of writing, the rate looks to be headed towards the 113.80 (R1) resistance line, where a decisive break is possible to open the way for the crossroad of the 114.40 (R2) zone and the downside resistance line taken from the peak of the 19th of January. Nevertheless, although the pair may continue trading north for a while, we maintain the view that the short-term path remains sideways. The rate has been oscillating between 111.60 and 115.50 since the 11th of January
USD/JPY surged after it hit support near the key obstacle zone of 111.60 and subsequently, it crushed three resistance (now turned into support) barriers in a row. At the time of writing, the rate looks to be headed towards the 113.80 (R1) resistance line, where a decisive break is possible to open the way for the crossroad of the 114.40 (R2) zone and the downside resistance line taken from the peak of the 19th of January. Nevertheless, although the pair may continue trading north for a while, we maintain the view that the short-term path remains sideways. The rate has been oscillating between 111.60 and 115.50 since the 11th of January
