8/17/2021

Before Powell's testimony today, I think it would be important to take a look at what we already know and what we could expect, as well as what to look out for in the latest coverage of the outlook of the USD.

Our outlook

In this testimony today, we will need to look out for whether Powell still thinks inflation is transitory or perhaps more persistent and ongoing than it was originally expected. US's CPI numbers gauge short term inflation, and if inflation ends up sitting at 4%, the likelihood that the Fed will exercise tighter monetary policy is greater, according to an article from The Hill. If the Fed is showing concern towards the mounting inflation and hinting at the potential raise of rates, USD will probably jump in price.

Trade Setups

DXY

The USD is up today as price is testing a double top around 93.110. Momentum looks strong today which means investors might be anticipating a more hawkish stance by the Fed. Support lies below in the 91.500s.

USDCAD

USDCAD is up today as well as the pair is touching resistance around 1.26462 on the 1D chart. Price is still in its long term consolidation zone, but it looks like the pair wants to test the top once again. The latest candle has broken above the 200 DMA which could be a bullish sign should it close above this level.

AUDUSD

AU fell lower this morning as the buck is starting to look much weaker than the dollar in terms of an economic and monetary standpoint. New resistance is around .73083 which price will likely have trouble coming back to regardless of Powell's testimony today. The obvious and strong downtrend indicates that we will probably see further downside in the future.