The US dollar is weaker leading up to this week’s highlight; Bernanke’s Jackson Hole speech. Most market commentary suggest a disappointment for those looking for a big announcement at today’s speech given the preemptive strike the Fed used yesterday in the Washington Post.
The insistence by the Finnish government to obtain a pledge of collateral in return for its contribution to the Greek bailout that was secured on July 21st has the potential to torpedo the fragile agreement. Despite Greek 2-year yields that are trading at an all-time high the EUR remains supported versus the USD and in the crosses. The EUR/GBP moved through resistance at 0.8830. The pair’s next resistance comes in at 0.8890 where the neckline of a potential head and shoulders pattern comes into play. The bullish chart pattern suggests a move of 240 pips but a more likely target is the resistance line off of the October and July highs at 0.9115.
FX traders appear poised to take advantage of a disappointment in the market should Ben Bernanke fail to announce additional quantitative easing measures. As this is being penned the EUR/USD is testing the 1.4400 level where the 200-hour moving average comes in. Support is seen at yesterday’s low of 1.4330 followed by the rising trend line from July at 1.4240. Traders should keep in mind the Bernanke speech is not the only news event on today’s economic calendar. US Q2 GDP is forecasted to decline to 1.1% from the advanced reading of 1.3%. A better than expected release could catch bearish traders off guard and force some short covering. EUR/USD resistance is found at 1.4480 and 1.4540.
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