The US dollar traded higher on suspicious new home sales data that came in at 468K homes, 62K more than analysts were expecting, following a string of poor housing data.
Federal Reserve chair Janet Yellen will speak in front of the Senate Banking Committee today, and the financial markets will listen closely if the recent weak data will be mentioned. It is expected that the Federal Reserve will carry on with the taper simply because they want out. As previously mentioned, I believe the Fed began to taper in the last moments in former chair Ben Bernanke’s tenor in order to preserve his legacy as the man that saved America.
The Fed is using this farce to exit from responsibility or blame if the economy turns for the worse. And it is likely that the so-called recovery will not be sustained without the Fed’s liquidity. Market participants are led to believe that tapering the seemingly endless quantitative easing program that the economy must be doing better.
Regardless of any underlying worry in economic data, all this optimism has been able to help support the dollar. Price action has been able to bounce off of support at 80.1 and break strongly through the declining trend line. The 200 EMA is the barrier to be broken at 80.58 in order to convincingly continue the upward movement with price action resistance just underneath at 80.53.
Support at 80.40 has been tested as support with deeper support at 80.20.
Yellen is likely to reiterate that the labor market is not as strong as it needs to be, but the boarder economy is showing signs of growth – regardless of what recent data has suggested.