Did you notice the gap on your forex chart among major currency pairs Monday morning?
This could very well have been the Jackson Hole Summit effect! Here’s a recap of the symposium.
US: Yellen won’t push to raise interest rates anytime soon
While Fed head Janet Yellen acknowledged that the U.S. jobs market has made considerable progress in improving after the financial crisis, she also pointed out that it has yet to fully recover. “If progress in the labor market continues to be more rapid than anticipated, then increases in the federal funds rate target could come sooner than the Committee currently expects and could be more rapid thereafter,” she mentioned.
But before US Dollar could dance up like crazy, Yellen also added “Of course, if economic performance turns out to be disappointing and progress toward our goals proceeds more slowly than we expect, then the future path of interest rates likely would be more accommodative than we currently anticipate.”
In conclusion, “Play it Safe” could be Janet Yellen’s middle name, don’t you agree?
EU: Draghi worries about Euro Zone
ECB head Mario Draghi said the ECB would stand ready to adjust its policy stance further since he believes that structural reform is needed in the euro zone. The region’s unemployment is at 11.5% and the GDP is flattening since the second quarter.
In addition, Draghi pointed out that inflationary prospects remain weak, with the annual CPI still miles away from the central bank’s 2% target. Surveys have also revealed that investors are pricing in weaker price pressures, which might push the region in a deflationary spiral if companies start reducing spending and investment.
Japan: Kuroda watching inflation closely
Bank of Japan governor Kuroda acknowledged that Japanese economy still needs improvements and that there are still important challenges to overcome. BOJ is focusing on price stability and might be ready to adjust monetary policy if inflationary pressures soften. He also shared that the Japanese labor market is seeing some improvements but that wage growth is also weak and that there is more reliance on part-time work. Bear in mind that the Japanese economy shrank by 1.7% in the second quarter with the sales tax hike weighing on spending, and the slack in the labor market might soon take its toll as well
Conclusion: USA up, Yen & Euro Down
The three testimonies seems to have been bullish for the US dollar and bearish for Euro and Japanese Yen.
GBP/USD 4-hour: Rebounding after reaching bearish target at 1.6500
Invest Diva likes: Long positions above 1.6566 with targets at 1.6599 and 1.6610 in extension.
If pair goes nuts: Below 1.6566 look for further downside with 1.6486 and 1.6336.
What’s up on the forex dance floor: The pair is moving up after reaching the second Invest Diva target at 1.6500. The RSI is heading to the neutrality area.
Supports and resistances
1.65664 pivot point
USD/CHF 4-hour: Mixed signals.
Invest Diva likes: Short positions below 0.9155 with targets at 0.9142 and 0.91300 in extension.
If pair goes nuts: Above 0.9155 look for further upside with 0.9177 as the previous top.
What’s up on the forex dance floor: The pair is teasing the resistance level at 0.91550 with the RSI just below the overbought zone.
Supports and resistances
1.3424 pivot point
USD/JPY 4-hour: Resistance at 104.25.
Invest Diva Likes: Short positions below 103.92 with targets at 103.62 and 103.22.
If Pair Goes Nuts: Above 103.92 look for further upside towards 104.30 and 105 in a long run.
What’s up on the Forex Dance Floor: The pair is teasing the resistance level at 104.25 with the RSI below the overbought zone.
Supports and Resistances
104.25 Previous Target Reached
100 Long Term Pivot Point
Long term traders. Don’t sweat the small losses and look at the big picture. Short term traders,
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