Support for the dollar continues, as traders sell the euro

The US dollar will be supported for longer than Janet Yellen's words about the need for further interest rates, as the euro will continue to be under pressure because of political uncertainty in Germany and Spain.

The Dollar Index is currently at 93.26 or the highest in a month. The index is at key levels, making a diagonal breakthrough and is in a horizontal resistance zone. If it succeeds in overcoming it, the positive sentiment in the green currency is likely to increase.

Fed chairman Janet Yellen said on Tuesday that the Federal Reserve should continue the gradual increase in interest rates, despite high uncertainty about the path of inflation. The comments suggest that the latest indications of inflation are not particularly relevant to the Fed. The focus of the central bank is not to delay too much the interest rate so that it does not have to happen in the future too abruptly.

Here are the main movements following Yelan's comments
- USD/JPY rebounded from 111.50 to 112.33
- The EUR/USD dropped to $ 1.1745 from $ 1.1800
- GBP/USD declined to 1.3360, with the impulse continuing to grow.

The euro has grown by more than 10% since the beginning of the year, but a lot of problems await it in the future, with political uncertainties in Germany and Catalonia, where the authorities are doing their best to thwart the local referendum to separate the region as an independent state .

Most market participants believe that the euro will be able to stabilize, but at the beginning of next year when it comes to how the ECB will cut the QE program and what government will govern Germany.

Source: Bloomberg Pro Terminal

Jr Trader Petar Milanov

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