Forex News: Heads of Central Banks Gather for Panel Discussions. Breakouts Expected

EUR/USD

Forex News: The pair showed a ranging session yesterday, approaching the 50 period EMA and then bouncing higher, without enough force to break resistance. The lack of major economic releases contributed to the slow movement.

Heads of Central Banks Gather for Panel Discussions. Breakouts Expected 1

Technical Outlook

Price remains range-bound, capped to the upside by the resistance at 1.1670 and to the downside by the 50 Exponential Moving Average. Today we have a busier day, with more economic data than yesterday, so we expect to see a break of horizontal resistance (1.1670) or dynamic support (50 EMA) and the break will probably decide the direction for the day. As long as these technical indicators are intact, our bias is neutral.

Fundamental Outlook

At 10:00 am GMT the Flash version of the Eurozone GDP comes out, showing the overall performance of the economy. The expected change is 0.6%, same as previous and usually a higher number strengthens the Euro but to a limited extent.

At the same time the German ZEW Economic Sentiment survey is released, showing the opinions of about 300 German institutional analysts and investors about the state of the economy, as well as an outlook for the next 6 months. The forecast is 19.8 and higher numbers show optimism, thus strengthening the single currency.

At the same time, 10:00 am GMT, ECB President Draghi, Fed Chair Yellen and BOE Governor Carney will participate in a panel discussion named “At the heart of policy: challenges and opportunities of central bank communication”. The discussion will take place at the Central Bank Communications Conference hosted by the ECB, in Frankfurt and the impact cannot be predicted but caution is recommended.

 

GBP/USD

He Pound dropped early in yesterday’s trading session due to concerns that British Prime Minister May could be asked to step down by her own political party. After dropping below 1.3100 support the pair recovered some of the losses.

Heads of Central Banks Gather for Panel Discussions. Breakouts Expected 2

Technical Outlook

Although price moved above 1.3100 after initially breaking it, the short term momentum still favours the bears and for today we expect to see a break of 1.3100 and a consequent move into 1.3030. As an alternate scenario, if the pair breaks the 50 period EMA to the upside, it will probably move into the resistance at 1.3175.

Fundamental Outlook

The day’s main event for the Pound will be the release of the British Consumer Price Index, scheduled at 9:30 am GMT and expected to show a change of 3.1% compared to the previous 3.0%. This is the main gauge of inflation and is carefully watched by the Bank of England when deciding where to set the interest rate. Higher values usually strengthen the Pound.

BOE Governor Carney will participate in the panel discussion mentioned earlier and this can generate increased volatility on Pound pairs.

 

Written by: Bogdan Giulvezan

The article above is based on the writer’s 7-year experience and it does not constitute trading advice or investment recommendations, just a personal opinion and view of the market.