Yellen's statement strengthens US dollar
Federal Reserve Chairperson Janet Yellen's speech highlighted the progress made by the U.S. economy in terms of achieving price stability and maximum sustainable employment. She confidently stated that there is a steady improvement in the labor market.
Janet Yellen feels that there can be an increase in rate hikes as long as the economy's inflation and employment is stable. Yellen hints at potential March interest rate hike and mentions that tightening the grip would not be wise.
U.S. NFIB small business index ticked up from 105.8 to 105.9.
U.S. Jan headline PPI ticked up 0.6% vs. 0.3% consensus. U.S. Jan core PPI ticked up 0.4% vs. 0.2% expected.
The Federal Open Market Committee (FOMC)'s aim is to always promote employment opportunities and ensure price stability in the economy. Upon analyzing the data received, the FOMC team will plan their actions accordingly in order to pave way for the federal funds rate. Any changes in the economic factors and other related policies will have a drastic effect on the economic outlook of the country.
The XAU/USD pair has been rejected at 1234.39 levels with stochastic flashing below 50.0 levels.
Shorting at current levels is a good idea since the levels will have a long-term resistance in the next couple of days. The price broke twice at 50EMA on the 4-hour time frame as the pair fell above the resistance levels. This setup looks good for the previous lows around 1206.71 levels.
If we take the most recent price action into consideration, we can see that the pair has been steadily trading lower inside a fresh descending channel.
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