Looming Fed Taper Talks Buoy The U.S. Dollar
The U.S. dollar and Treasury yields edged up Wednesday as investors weigh the possibility of a reduction in stimulus. Federal Reserve Vice Chairman for Supervision Randal Quarles said yesterday it will be important for the Fed to begin discussing in coming months plans to reduce its bond purchases. As we noted in previous posts, the next important Fed meeting will be on June 15-16.
Today we will have some U.S. data on tab such as jobless claims, GDP, durable goods and pending home sales that could affect the dollar’s price action in the afternoon.
Technically, we got what we have been looking for, at least in the EUR/USD where we saw a bearish price breakout sending the pair lower towards 1.2170.
Trading within the GBP/USD’s sideways range, however, has proved difficult as of late and thus we continue to wait for better trading conditions in this pair. Falling below 1.4070 we expect the cable to head for a test of the lower support area around 1.4030-20, whereas above 1.4160, bulls may attempt to push the pair towards a renewed test of 1.4230.
The DAX found a short-term support at 15400. If the index falls below 15350, we will shift our focus to the lower support at 15100. On the upside, a next target is 15630.
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