FOREX NEWS: THREE KEY SPEECHES, THREE HUGE REASONS FOR VOLATILITY
Forex News: The German IFO Business Climate survey posted a better than expected value, while the U.S. Durable Goods Orders disappointed, so the Euro won yesterday’s battle with the US Dollar and the pair finished higher.
Yesterday the pair descended, touching 1.1170 to the pip and then bouncing higher. This established the level as support and makes the short term bias bullish, with 1.1240 as first target. If and when the pair touches the mentioned resistance, we expect to see a pullback, mainly because the Relative Strength Index will become overbought and the pair is not in a strong trend.
Early at 8:00 am GMT, ECB President Mario Draghi will speak in Portugal at the European Central Bank Forum on Central Banking. We don’t know how this speech will affect the currency but caution is recommended every time heads of central banks speak publicly.
On the US Dollar side we have the U.S. Consumer Confidence survey, scheduled for release at 2:00 pm GMT. The forecast for this survey is 116.2 (previous 117.9) and a higher value shows increased consumer confidence and possibly higher consumer spending levels in the near future; this in turn strengthens the US Dollar but the impact is not huge.
The final event of the day is a speech of Fed Chair Yellen, focused on global economy and delivered at the British Academy 'President's Lecture', in London. The scheduled time is 5:00 pm GMT.
The pair showed choppy price action yesterday, first dropping below the 50 period Exponential Moving Average and then immediately jumping higher, close to the high of the day.
Even if the bears didn’t manage to break the 50 period EMA, the current move up lacks strength and seems exhausted. That’s the main reason why today we expect to see another attempt to break the Moving Average, and possibly a move into 1.2690. If price remains above the 50 EMA, the most likely target is 1.2770 but we don’t expect a break unless Carney’s press conference triggers Pound strength.
At 9:30 am GMT the Bank of England will release the Financial Stability Report and half an hour later BOE Governor Mark Carney will hold a press conference, discussing the Report. These two events call for caution because they could easily trigger volatility and possibly erratic price action.