Dollar counts on hawkish rhetoric of Powell
Major currency pair entered in a consolidative mode that looks predictable, given the approach of the main events of the week – Powell’s speeches in Jackson hole. The dollar is a little shy, not daring to continue yesterday’s correction. However, the European currency is not pretexts to return to the previous rate of growth.
Closing levels of the dollar pairs will depend on the rhetoric of the fed. The baseline scenario, which partially factored into prices implies hawkish rhetoric of Powell in regard to the prospects of monetary policy. There is a fairly high probability that such a scenario is realized, including to emphasize the independent status of the Central Bank in the context of recent criticism of three of the Federal reserve.
Risk factor for the dollar in the context of the upcoming performances – mention of risks of a trade war between the US and China, as well as comments, signaling the approach of the “neutral interest rate level”.
Under favorable for the dollar scenario EURUSD is liable to return under the 20-day moving average and again jeopardize the integrity of the level of 1.15, depending on the level of “aggression” the head of the Central Bank. The pound, which has managed to touch a mark of 1.28, you may go under 1.2750. The dollar/yen will continue to strengthen after the storming of the intermediate resistance near 111.50.
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