Dollar Rate Today (14/11): Outlook for USD dominated by Yellen; but expect volatility in coming hours

The pound dollar rate is today converting at the useful round figure of 1.6000 (11:20 GMT); this being 0.35 pct lower than seen at last night's close. GBP has 'given up the ghost' against the USD following on from this morning's under-whelming retail sales numbers.

The euro dollar exchange rate is meanwhile 0.48 pct lower at 1.3423; a poor set of Eurozone GDP numbers has not aided the case of the shared currency today.

Please keep in mind all quotations here are inter-bank spot rates. Your retail rate will be delivered with a spread being subtracted by your bank at their discretion. This is a competitive market though and the good news is that an independent FX provider will seek to beat your bank's rate, thus delivering up to 5% more FX. Please learn more here.

Why is the US dollar stronger today?

The US dollar has seen increased interest thanks to a favourable view taken of the pre-written comments issued by prospective head of the US Federal Reserve Janet Yellen.

Yellen is due to appear before congress today and this will undoubtably be the highlight for the dollar exchange rates today.

Equity markets focused on this passage in particular, "we have made good progress, but we have farther to go to regain the ground lost in the crisis and the recession. Unemployment is down from a peak of 10 percent, but at 7.3 percent in October, it is still too high, reflecting a labor market and economy performing far short of their potential. At the same time, inflation has been running below the Federal Reserve's goal of 2 percent and is expected to continue to do so for some time."

But - why is the US dollar being boosted by such dovish remarks? This would typically be seen as a USD negative.

According to Boris Schlossberg at BK Asset Management the reason the USD bulls liked what they heard was simply because we may be getting more clarity.

"Although Ms, Yellen's view suggests that the Fed may hold off on taper perhaps until March, her testimony today could clarify that issue and as result the US session could be quite volatile as markets react to her rhetoric," says Schlossberg.

Technical outlook for GBP/USD, EUR/USD

"GBP/USD remains capped at the 1.6050 barrier and could drift below 1.6000 once again if dollar strength picks up in North American trade," says Schlossberg.

Commenting on the outlook for the euro dollar, Luc Luyet at MIG Bank says:

"EUR/USD is bouncing after having successfully tested its recent low at 1.3296 (see also the 50% retracement). A resistance stands at 1.3548. An initial support is given by the rising trendline (around 1.3396).
"In the longer term, the decisive break of the strong support at 1.3462 confirms that a significant top at 1.3832 has likely been made and favours the start of a new phase of weakness. A gradual decline towards the key support at 1.3105 (06/09/2013 low) is likely."