We are seeing a rebound in the dollar after a good start in the wake of comments voting member of the FOMC William Dudley, who said that a rate increase in September seems less convincing.
Although this is not necessarily a surprise given the extreme levels of market volatility as of late concern and increasingly in emerging markets and how it can impact the US , recognizing it hit the dollar.
the end of the week will focus on the Fed with a number of political leaders due to speak, including Vice President Stanley Fischer Symposium in Jackson Hole. Similar recognitions from other policymakers would increase the rate much less likely in September, bringing the home in December. As noted Dudley, there is a desire to raise rates this year if possible.
The euro had broken below 1.14 against the dollar before the comments from Dudley, wiping out the gains made during the rally on Monday which was driven by the unwinding carry trades. The rapid reversal of this rally could suggest that the feeling is not as optimistic that Monday's motion suggests.
That said, the pair is still close below 1.14 and a failure to do so would effectively act as confirmation of the break, in effect lending credibility to the initiative Monday.
in addition to the momentum still seems to be firmly on the rise, suggesting the bulls are not done yet. A break of the Stochastic trend line may be an early sign that the momentum is moving.
Finally, the 4 hour chart also looks very bullish with the rear traction on both days fall forming a wedge, a bullish formation. A break above it could trigger another strong rally high.
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