Global macro overview for 22/05/2017:
In the late Friday comments, St Louis Federal Reserve President Bullard said, that since the last FOMC meeting in March the job market conditions have deteriorated significantly and the inflation is not growing as strong as expected. After the March interest rate increase, the inflation is not rising as fast and the long-term yields are in decline. This is why he suggest the FOMC is moving too fast for rising interest rates at the next meeting. Bullard is a well-known supporter of low interest rates, belonging to the doves' camp, so he thinks one interest rate hike per year should be enough for the current economic conditions. This is why his dovish comments are no surprise, but the impact on FOMC Chairperson Jannet Yellen might be quite important. Interestingly, earlier this year FOMC announced two of three interest rate hikes in 2017.
Let's now take a look at the US Dollar index technical picture on the H4 time frame. Since the last interest rate hike, the index keeps making lower highs and lower lows and now is trading quite close to the important support at the level of 95.91, when the results of the US presidential election were announced. So far the lowest low has been made at the level of 97.07 and now the price is trying to bounce above the technical resistnace at the level of 97.31. Nevertheless, to reverse the trend, the bulls would have to push the price above the level of 98.48 and then above the level of 99.90.
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