YELLEN’S SPEECH IN FOCUS TONIGHT
Tensions in the market remain extremely high in anticipation of statements from the Fed’s chairwoman Janet Yellen at 16:00 GMT and the ECB’s President Mario Draghi at 19:00 GMT. Traders will be paying close attention to the rhetoric of the two central bankers. A confident Yellen on the US economy may provide a signal about the third rate hike in the US for this year and we may see massive selling of the EUR/USD. The price of the pair is currently considered to be overvalued by a number of analysts. Mario Draghi is less likely to announce changes to the ECB’s plan on monetary policy tightening.
Today the EUR/USD received support from the German GDP report that showed an increase of 0.6% for the second quarter of 2017, which has met expectations. Serious support for the pair’s quotes came from the US durable goods orders report according to which the indicator declined by 6.8% in July which is 0.8% worse than expected. On the other hand, core durable goods orders increased by 0.5% against the forecasted growth of 0.4%.
The USD/JPY has not changed much during today’s trading session. Statistics on the national core consumer price index in Japan have shown 0.5% growth in August compared to the same period of the previous year. This indicator was in line with expectations. Volatility is expected to increase after today’s speech by Janet Yellen in Jackson Hole.
Gold price is showing high volatility levels. In case of hawkish rhetoric by the Fed’s Chair, we are likely to see a sharp decline in demand for the precious metal. On the other hand, a dovish Ms. Yellen will help the price to overcome the resistance at 1,300 USD per troy ounce.
The EUR/USD tested resistance at 1.1825 and was able to overcome it. In case of fixing above this hurdle, the next targets will be 1.1900 and 1.2000. Volatility is likely to grow tonight and in case of the fall resuming, the immediate targets will be located at 1.1700 and 1.1620.
The USD/JPY was consolidating near the important 109.60 mark today and fixing above it may become the trigger for further price increases up to 110.30 and 111.00. An additional factor that is in favour of an increase may be the recent breaking through of the inclined resistance line. The closest support range in case of a fall renewal will be 108.50-108.85.
Gold prices are demonstrating high volatility in anticipation of important news from Jackson Hole. In case of the price gaining a foothold above 1300, the upward trend may continue up to 1330 and above, but on the other hand, fixing below 1280 may be judged as a clear sell signal with potential targets at 1252 and 1240.