Dollar is a touch softer today against most major currencies as Bernanke starts his two days semiannual testimony to congress. In his prepared speech, Bernanke said that low interest rates are still required as US economy is in a nascent recovery. He said that sustained recovery will depend on continued growth in private-sector final demand for goods and service, while are growing at moderate pace only. Fed wills tart to tighten policy at some point but Fed anticipates low rates of resource utilization, subdued inflation trends, and stable inflation expectations to keep rates low for an extended period.
On the data front, US new home sales unexpected dropped -11% to record low of 309k annualized rate in January. The data raised concern that housing market recession in the US is not over yet. Released earlier today, German Q4 GDP was confirmed to be at 0% qoq growth. Gfk consumer confidence dropped slightly from revised 3.3 to 3.2 in March. Eurozone industrial orders beat expectations by rising 0.8% mom, 9.5% yoy. Japan trade surplus widened to JPY 0.73T in January. Corporate service price dropped -1.0% yoy in January.
Looking at the dollar index, with 4 hours MACD crossed below signal line and 80.57 minor support broker, recent rise might be be ready to resume yet and we could seen more sideway consolidations first. Nevertheless, such consolidations should be relatively brief as long as 79.56 cluster support holds (38.2% retracement of 76.60 to 81.34 at 79.52). Break of 81.34 will bring rally resumption towards 82.63 medium term resistance next.
USD/CHF Mid-Day Outlook
Daily Pivots: (S1) 1.0753; (P) 1.0800; (R1) 1.0887; More.
With 4 hours MACD crossed below signal line, intraday bias is turned neutral again and consolidations from 1.0897 might extend further. Below 1.0714 minor support indicate that a short term top is in place at 1.0897 on bearish divergence condition in 4 hours MACD and RSI. In such case, bring deeper pull back should be seen to 1.0608 support and below before another rally. On the upside, though, break of 1.0897 will confirm that recent rally has resumed. Also, note that sustained trading above medium term trend line resistance (now at 1.0864) will pave the way to 161.8% projection of 0.9916 to 1.0506 from 1.0131 at 1.1086 next.
In the bigger picture, medium term correction from 1.2296 should have completed with three waves down to 0.9916 already. Current rise from 0.9916 is tentatively treated as resumption of the long term up trend from 2008 low of 0.9634. Sustained break of mentioned medium term trend line resistance (now at 1.0864) will further affirm this view. In such case, we'd be looking at stronger rise to 1.1963/2296 resistance zone in medium term. On the downside, break of 1.0131 support is needed to invalidate this bullish view. Otherwise, another rise is still expected even in case of deep pullback.