Wednesday, August 29, 2012

Euro & Dollar See Strength Ahead of Jackson Hole

Coming Up This Week

  • Preliminary US GDP
  • US Pending Homes Sales
  • Late Wedneday/Early Thursday – NBNZ Business Confidence and Australian Building Approvals

As expected, Forex traders continue to look ahead to Friday’s speech from Fed Chairman Ben Bernanke. As such, market moves have been muted. Although the gains have been small, it is worth noting that both the Euro and dollar are strengthening overall this week. As such, the dollar’s strength could be revealing low expectations that Bernanke’s will yield much new information about the Fed’s future actions. Also, the Euro’s strength could be an indication that Forex traders are becoming more comfortable with the rumored plans of monetary policy actions from the ECB.
 Elsewhere, one pair to watch today is the AUDUSD. After breaking below its uptrend channel, the pair hasn’t suffered much downside as it hovers around 1.0375. However, Australian Building Approvals and Private Capital Expenditure figures which will be released early Thursday could bring momentum back in play in the AUDUSD.  

Charts to Watch 

GBPUSD: After breaking out above its long term 1.5750 resistance (see chart), the GBPUSD was weaker yesterday. However, by finding support at 1.5750, the pair is showing that the demand that led it to rally above its long term resistance level remains intact. At a current 1.5800, the pair could make another move towards 1.5900 if it breaks above its intraday high of 1.5825.

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