Today EURUSD could definitely be an interesting currency pair due to a number of statements by Fed and ECB members, the most important of which will be Jerome Powell's speech at 2:15 PM GMT. It seems that the Federal Reserve chief will want to modify a bit the message from the last conference, which was perceived by the markets as mostly dovish - expectations for Fed rate cuts have increased and today the markets are pricing in 100bp cuts next year and the start of easing in June. Faced with several hawkish statements from several bankers including Kashkari, Logan and Bowman yesterday, Powell may confirm their narrative and emphasize that if the US economy remains strong - the Fed will likely be forced to tighten policy and is ready to keep raising rates. Recent ADP and most importantly NFP data showed that the labor market in the States is stabilizing - and most importantly oil prices are falling but still policymakers can't let market speculation lead to a rise in inflation expectations - if the Fed is perceived as 'too soft'.
Volatility on EURUSD may also increase today around 10:00 AM GMT when Eurozone retail sales readings will be published, and around 3:00 PM GMT when US wholesale sales data will be known. The readings could say more about organic demand in the US economy and shed more light on the actual condition of consumers. According to the ECB survey, Eurozone consumers see annual inflation at 4% versus 3.5% previously, but policymakers are in a tough spot. The eurozone economy is not similarly resilient to the U.S. economy, and prolonged tightening could end in a more painful recession or other systemic problems. With this in mind, markets may not necessarily take such news as good coin for the European currency.
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Open real account TRY DEMO Download mobile app Download mobile appEURUSD is now in the 'grip' of two exponential averages EMA100 (black line) and the EMA200 (red line). Above the SMA100, buyers encountered strong resistance in the 1.075 zone and now, after 2 days of declines, EURUSD quotes are testing the exponential 200-session average at 1.067. A drop below this level could potentially herald a correction on the EURUSD and a breakout from the bottom of the flag formation, which could herald a potential trend reversal. At the moment, however, the underlying trend remains an uptrend (trend line preserved), and as long as EURUSD is trading above 1.05 - the trend could favor Eurodollar bulls.
Source: xStation5
