It wasn't the CPI report that gave the dollar a lift on Tuesday but rather a strong housing starts report. EUR/USD and GBP/USD both fell to longer-term lows and USD/JPY is near the July high. The next event to watch is an appearance from RBA Governor Stevens. As we move towards this evening's Aussie events, EURAUD sustains its 3rd consecutive quarterly decline, which is the longest losing streak in 4 years. Since we opened two Premium shorts in EURAUD more than 4 weeks ago, a net of 180-pips has accumulated in both trades. The key with these trades is not only determining the correct direction, but also managing stops carefully. Full details of these trades and today's charts are found in the Premium Insights
We wrote yesterday about the lack of enthusiasm for Yellen's speech and overall complacency on the Fed. An overwhelming consensus of analysts sees nothing but endless calls for patience and slow steps to raising rates. The consensus is so clearly dovish that we argued there is little risk in betting on a more hawkish stance and stronger dollar.
That's part of what happened on Tuesday as the US dollar broke out of a recent period of consolidation against the euro and continued to punish the pound following 7 weeks of declines in cable. The next shoe to drop could be USD/JPY as it flirts with 103.00.