Euro and pound remains bearish ahead of Fed Chairman Jerome Powell's speech at the Jackson Hole symposium today. Most likely, investors are waiting for hints as to how and at what pace the US central bank is going to raise interest rates in the September monetary policy meeting.
If Powell continues to be hawkish, dollar will strengthen further, while risky assets and the US stock market will fall down. But if he hints at a more restrained policy, risk appetite will surge and there will be a sharp jump in many trading instruments.
In addition to Powell, the event will be attended by Fed Vice Chairman Lael Brainard and three other Governors: Lisa Cook, Philip Jefferson and Chris Waller, as well as all 12 regional Fed presidents. Some of them are planning to comment before the Fed chief, which could shed light on his final statement. The conference will also be attended by Bank of Japan Governor Haruhiko Kuroda and Bank of England Governor Andrew Bailey.
European Central Bank President Christine Lagarde did not attend the meeting, but ECB executive board member Isabelle Schnabel did. A number of other ECB officials are also present, including the heads of the Bank of France and the Bundesbank, as well as policymakers from Africa, Latin America and elsewhere.
In terms of the main points of the agenda, there will be four presentations on Friday and Saturday, and there will be discussions every day with the participation of the policymakers. Speakers will also cover topics such as maximum employment, potential output, fiscal constraints and central bank balance sheets.
Talking about the forex market, the risk of a further decline in EUR/USD remains. Buyers need to cling to 1.0000 because without it, the pair will have a difficult time rising. Going beyond 1.0000 will open the path to 1.0030 and 1.0070, as well as to 1.0200. But if sellers were more active, the pair will fall to 0.9950, then to 0.9910, 0.9860 and 0.9820.
In GBP/USD, buyers managed to push the quotes up, strengthening the chance of an upward correction. Staying above 1.1800 will open the path to 1.1840, 1.1880 and 1.1930, while falling below 1.1800 will push the quotes to 1.1750, 1.1720 and 1.1680.