Jackson Hole Symposium Preview: Powell To Down the Dollar?
Fiona Cincotta August 26, 2020 3:17 PM
All eyes on the Fed. Is a policy change to ATI on the cards?
Rather than meeting at Jackson Hole, the Wyoming ski resort, the coronavirus pandemic has forced the congregation of central bankers, policymakers and finance minister to go virtual.
Virtual or not, the markets will be watching regardless, the US Dollar, the Dow and Gold often experience heightened volatility around the event.
All eyes are on Federal Reserve Chair Jerome Powell’s keynote address due 2:10pm (UK time). The Fed Chair is expected to pre-announce the findings of the Monetary Policy Framework review, a review of the Fed’s policies and practices to deal with the “new normal” which is slow global growth, low inflation and low interest rates.
If Jerome Powell were to talk about average inflation and the adoption of Average Inflation Targeting (ATI) traders will be sure to take note.
ATI is important because it will mean a change in policy from a firm inflation target to one which permits an overshoot over time. This would be a hint to the market that the US central bank would allow inflation to stay above 2% for a while, essentially meaning that interest rates will stay lower for longer.
The EUR/USD trades -0.15% on Wednesday, with little change ahead of Jerome Powell’s speech at Jackson Hole. The pair is trading at 1.1815, towards the upper end of the daily traded range of $1.1772 - $1.1839.
On the four-hour chart, the price trades below the 50 sma and 100 sma suggesting more weakness could be on the cards. Although it trades above its ascending trendline and 200 sma.
Immediate support can be seen at $1.1750, a break through here could open the door to $1.17. Resistance can be seen at $1.1825 &$1.1850 (50 & 100 SMA) and $1.1885.
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.