Market Drivers September 26, 2017
Eur at month lows
Yellen on deck
Nikkei -0.38% Dax -0.08%
Oil $52/bbl
Gold $1305/oz.

Europe and Asia:
No Data

North America:
New Homes Sales 10:00
Yellen 12:45

The dollar gathered strength in early European trade today as EURUSD hit one-month lows coming within a few pips of the key 1.1800 support level.

The euro continued to suffer from after effects of a lackluster win by Angela Merkel which left her with several unpalatable options to form a coalition government. The markets continue to worry that in her weakened political state Frau Merkel will not be able to maintain the steady policy consensus that has resulted in the best Eurozone recovery in years.

The euro which has already appreciated markedly this year stalled at the 1.2000 level ahead of the election and today’s price action likely reflects continued profit-taking after such a significant run-up. The pair has support at the 1.1700 figure and could drift there are the week proceeds.

Although the eco calendar is light today, the market may still see some volatility in afternoon NY trade when Janet Yellen delivers the keynote address at the NABE Annual Meeting to Assess Prospects for Growth in Shifting Global Economy, in Cleveland, with audience Q&A to follow. Ms. Yellen is likely to maintain a hawkish tone in her remarks reaffirming the latest FOMC statement last week. Any dollar supportive rhetoric could push USDJPY back above the 112.00 figure while sending euro below the key 1.1800 support.

As many analysts have already pointed out the German election has taken the sails out of the euro rally and today Ms. Yellen could turn that sentiment even more negative by affirming he her support for further US monetary tightening.