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Old 17-11-2016, 10:47 PM
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Default EURUSD Market Outlook by Option Banque

EURUSD Falls Deeper After Yellen’s Testimony- Buy The Dips Or Keep Selling?

EURUSD plunged for the ninth trading session after a series of economic data and remarks of Federal Reserve President Janet Yellen strengthened the case for the a rate hike in December.

Speaking to the Joint Economic Committee of Congress, Yellen said an interest-rate hike could come “relatively soon.” Although the Fed Chairwomen did not point out the specific time for the next rate increase, she did little to dispel expectations of a hike as soon as next month. Yellen also said that she will serve out her full term until it expires in February 2018.

Ahead of an appearance before the Joint Economic Committee, Yellen stated that both of Fed’s targets which are labor market approaching full employment and inflation surging towards 2% goal are almost reached.

According to the U.S. government, consumer inflation continued to rise in October, spurred by from more expensive gasoline. The consumer price index jumped at the fastest rate in six months, adding 0.4% last month on a monthly basis. Compared to the same period last year, the CPI has advance 1.6%, marking the biggest increase in two years.

The so-called core CPI, which excludes the cost of food and energy, rose only 0.1% month-on-month. The core rate increased at a 2.1% annual pace, which is close to the Fed’s target for inflation. However, the central bank’s favorite measure known as PCE is a bit lower by comparison.

Contributing to the dollar rally, the Philadelphia Fed reported its manufacturing index remained above the zero level (which indicates improving conditions) for four months in a row. Although the reading eased in November to a reading of 7.6 from 9.7 in October, measures of general activity, new orders, and shipments all pointed to positive conditions.


Fig: EURUSD D1 technical chart

EURUSD keeps plunging towards the lowest level since early December 2015. Long upper shadows in recent candles indicate that buyers jumped in the market to buy at low prices but failed to support for a reversal into an uptrend. Indicator chart show that the market has been falling deeper into the oversold zone. The next support for the pair is at 1.06300.

Trade suggestion
Buy Digital Put Option from 1.06500 to 1.06300 valid until 21:00 GMT November 17, 2016
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