Forex news for US trading on August 26, 2016

The forex market waited for the headlines from the Yellen speech all week. When they hit the newswires at 10:00 AM ET/1400 GMT, the initial move was a spike higher in the dollar. Then on inspection (and perhaps as a result some technical levels holding), the dollar reversed. Yes, the Fed Chair said the case for interest rate increases had strengthened but it was also accompanied with the the disclaimers - i.e., Fed depends on data, not on a preset course, range of possible rate hikes paths is wide and shocks could change the path. Was it the same ole Yellen hemming and hawing.

So the dollar ranged.

Later when Vice Chair Fischer said in response to a question that Yellens comments are consistent with a possible rate hike in September, the dollar buyers came in and pushed the dollar higher.

The USDJPY was the biggest mover on the day. The pair had been confined in a triangle going into the event. As the day unfolded, key technical levels were taken out. The 100 bar MA on the 4 hour chart at 100.95. Trend line resistance at 101.29. By the time the high was reached in the NY afternoon, the pair had nearly made it to 102.00 (high reached 101.936). It is just a two week high for the pair. So there is room to roam.

The EURUSD was also on a down and up roller coaster ride before the dollar buying started to take charge. A move below the 1.1220 level - the 100 day MA - was the push needed for lower levels. That MA will be key in trading next week.

The GBPUSD was relatively speaking, the least impacted by the dollar run. The pair was still lower by 0.41% on the day but there was less of an urgency to sell. The pair closed the week near the 200 hour MA at the 1.3134 level. At the end of the trading day, the CFTC commitment of traders report continued to show that the short are at record levels. Perhaps that helped contribute to less downside as traders took advantage of the decline to cover some shorts.

The USDCAD, AUDUSD and NZDUSD were all impacted by the stronger dollar. If the Fed should tighten in September, it would take some of the carry trade buying in pairs like the NZDUSD and the AUDUSD. The NZDUSD - which earlier in the day traded at new 2016 highs - was particularly vulnerable to the downside.

Over the weekend, BOJs Kuroda and ECB Coeure will be be speaking on a panel on Saturday at 12:25 ET

The chart below shows the % change of the foreign currencies vs the US today. All currencies lost ground vs the greenback with the USD rising the most vs the JPY (1.21%).

The chart below shows the % change of the foreign currencies vs the USD this week. All currencies - with the exception of the GBP - were lower.

Have a great weekend to all!