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#1 15-09-2020 12:25:45

johnedward
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From: Paris - France
Registered: 21-12-2009
Posts: 2881
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EUR/USD: key events this week

EUR/USD: key events this week


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The ECB stole the spotlight last week as currency traders awaited an interest rate decision and press conference on Thursday. Volatility increased as the ECB delivered a hawkish message, somehow against what the market was expecting.

The EUR jumped on the ECB's hawkish message. All euro pairs won - the EUR/GBP being the champion, as the UK signaled that it is ready to break international law regarding the Brexit agreement.

However, as far as the world's reserve currency, the USD, is concerned, things have not really changed. The EUR/USD continues to move towards 1.20, finding buyers below the 1.18 zone, the AUD/USD is trading near recent highs around 0.725, and the USD/CHF's negative correlation with the EUR/USD is increasing day by day.

The general feeling is that the market is collapsing, waiting for the situation to change. The answer may come from this week's events.

All eyes are on the Fed's communication

Recently, due to a narrowing of the interest rate differential between the G10 central banks, the currency market has been moving in a risk-on/risk-off correlation.

On Wednesday, the Fed releases its FOMC Statement and economic projections. The press conference is particularly important because representatives of the financial media have the opportunity to ask the Fed for more details on targeting average inflation.

With the USD as the world's reserve currency, volatility is expected to increase during the press conference, as market participants will be watching every word that Jerome Powell says.

The Bank of England will make its monetary policy decision on Thursday. The focus here is on how the Bank of England views the recent weakness in sterling caused by the dramatic change in the Brexit negotiations.

New Zealand GDP and the Australian unemployment rate are also expected this week, but they are not expected to change the situation for local currencies. As always, traders will be focusing on the big picture - it's more important to be on the safe side when the Fed's message comes out.

All of this week's other economic data comes in second place in terms of importance. Considering that the U.S. elections are in November, there is a good chance that this week's events will eventually strengthen recent ranges.

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