I now actually think the failure to break the 200-day moving average (now at 96.78) over the last couple of days could be key. From a pure trend-following perceptive, selling rallies at 97.50 makes a lot of sense; however from a fundamental perspective I feel a bounce is due in the USD. I never fight trends, but feel aggressive traders could look for a bit more of a pullback to 96.80 to initiate longs. Stops on these positions could be placed just under the August 9 low of 95.80.
The big talking point on the floors today has been that President Obama is set to announce Janet Yellen as the new Fed president. This was fully expected as she had been a massive front runner for some time, although an article in Forbes had suggested the President would announce Donald Kohn as the new president. There has been a bit of a small spike in the S&P futures, with EUR/USD testing the 1.36 handle; however USD/JPY hasn’t really budged.
The FOMC minutes in upcoming trade could be quite interesting for price action, as will speeches by Fed presidents Charles Evans and Dennis Lockhart. The market goes into the minutes short USDs and thus narrative that suggests the view to taper is a close one could push the USD higher. The probability of tapering in the December meeting is falling by the day, and at present I say the probability is around one in three.