Crucial Week For USD: All Eyes On Trump Speech

 | Feb 27, 2017 06:18AM ET

The U.S. Dollar rebounded against the euro and British pound as investors are hoping for details on Donald Trump's spending plans. Trump's first speech to Congress on Tuesday will be this week's main risk event with market participants eagerly waiting to get some detail on the still-uncertain fiscal policy of the Trump administration. With less than a 40 percent chance of a March rate hike there has been little consistency in the performance of the greenback and traders do not seem to be convinced that the so-called "Trump trade" could be revived anytime soon, even though firming rate hike bets offered a bit of optimism.


Apart from Trump's address before the congress tomorrow, investors will be watching comments from Fed officials, including Fed Chair Janet Yellen, who speaks at the end of the week. On the economic data front, U.S. GDP figures (Tuesday), Manufacturing ISM (Wednesday) and the Non-Manufacturing ISM report (Friday) will be important to watch.

EUR/USD
The euro came under increased pressure as odds of a Marine Le Pen win during the French elections seem to be creeping higher. In short-term time frames we expect the euro to trade between 1.06 and 1.0560. Above 1.0615 it may head for a test of 1.0640/50, while a break below 1.0535 could drive the pair towards 1.0460. However, the risk remains tilted to the downside and we generally expect further losses in this pair.