A good time to come back to the forex news blog, with Mario Draghi speaking sandwiched between two Janet Yellen speeches in the next 24 hours. This of course puts EUR/USD firmly in play for the trading day and gives us a good opportunity to bring up this major daily support level from 2015.
First up lets focus on the meat between the sandwich, ECB President Mario Draghi. All the data coming out of the EU is pointing toward a further undershooting of the 2% inflation target over the next two years and as a result, markets are expecting the same Draghi Drag on the Euro as he will probably look to stay the course on QE through to the end of 2017.
The outlook in both the Eurozone’s inflation readings as well as economic growth do however give the market reason to be optimistic heading forward, with some key figures from both major player Germany, as well as key stakeholders inside the ECB calling for a scaling back of stimulus.
With Fed Chair Janet Yellen speaking this morning and giving USD a boost thanks to her optimistic tone on the condition of the US economy leading to the full normalisation of interest rates, we can see that EUR/USD is pulling back:
This pullback is extra interesting since price has re-activated and bounced off the higher time frame daily support level shown here:
With the daily support level holding and an intraday pullback today, if Draghi is at all Hawkish, could we could see a big bullish rip higher? Yellen hasn’t offered us anything the market didn’t already know and I’m of the opinion that rate hikes are well priced in anyway.
Remember, we have that daily support zone as a bit of a safety net behind us if Draghi isn’t the pro-stimulus President that EUR/USD buyers want.
Keep an eye on your forex calendar and of course let us know what you’re watching with a mention of @VantageFX on Twitter!
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Dane Williams – @VantageFX
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