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The volatility has increased since yesterday on the pair EUR/USD, but the underlying trend remains broadly uncertain.
Remember that after a correction up to a low of 1.1205 in the morning, the pair EUR/USD rebounded sharply, up to mark a summit to 1.1281 in the course of the night.
The fall in the first part of the day was at least in part, to link to information from Bloomberg according to which the ECB would think about it to change the inflation target, its mandate, and this could open the way according to the economists to maintain a monetary policy accommodating longer than in the current framework.
The president of the Fed of New York beating down the Dollar
The rebound that the pair has posted, then, was first of all to be attributed to technical factors, but a speech of Williams, the president of the Fed of New York has clearly accentuated the fall in the Dollar, and, therefore, the rebound of EUR/USD in the evening.
It was felt that “it is better to take preventive measures on the rate than wait for a disaster”, among other comments dovish. This has immediately led to a surge in the probability that the Fed lowers its rate of 0.50% rather than 0.25% at the end of the month, which explains the impact strongly bearish on the Dollar.
In the Face of the impact of the words of its chairman, the Fed of New York has then tried to rectify the situation, stressing that the speech of Williams was an academic discourse based on research, and that it did not contain any indication about the Fed meeting 31 July.
This has enabled to make up the Dollar slightly, but the EUR/USD pair, however, keeps the bulk of the gains from yesterday and begins the final european session of forex trading of the week.
Technical analysis EUR/USD
The Euro-Dollar is, in fact, crossed above its moving averages 100 and 200 hours, and above the resistance of 1.1250, which are all elements that will serve media.
The other hand, the rise yesterday was also allowed to confirm the strength of the resistance of 1.1280 (with a 4th test to be unsuccessful since 10 July), and the reluctance of traders to go test the psychological threshold of 1.13.
A return of the decline is not excluded, but we will consider that the buyers remain in control as long as the EUR/USD does not fall below 1.1235-40.
A break above 1.13 confirm the upward bias, and would consider an extension to 1.1350, or even 1.14.
Finally, as regards the economic calendar of the day, we will monitor especially the consumer confidence index according to the University of Michigan (16h, and a speech from Bullard, a member of the Fed, at 17: 05.
