Yesterday, USD dollar unexpectedly declined and lost some of its earlier gains relative to the European currency after the appearance of new important information on the policy of the European regulator. Reuters has spread the message that supporters of soft monetary policy in the ECB Governing Council support the idea of completing a large-scale bonds purchasing program this year.
Recall that at this time, the European Central Bank buys assets of 30 billion euros a month, and intends to continue buying up to the end of September. Then, within three months, QE program is supposed to collapse. This is certainly a positive mid-term driver for European currency, and looks like it was on these data yesterday the euro moved to recovery.
As for the other main information event of the week, the Fed meeting, experts believe that the rate hike is already put in the current USD dollar price, so now investors refrain from buying US currency, and the actual output of the news can even weaken the dollar. As expected the main impact for the market will come from the comments of the new Fed Chairman. Whether Jerome Powell will save his "hawkish" rhetoric or be more lenient in his statements is a kind of the main question of last days.
On this contradictory background, and under the influence of contradictory factors, the European currency continues to trade in pronounced sideway dynamics around the level of $ 1.23. Moreover, there was a narrowing of the trading side range to the limits of $ 1.2270- $ 1.2410. We expect that tomorrow on Wednesday at the American session market volatility will increase and the market will attempt to storm the upper or lower range of the sideway channel, depending on Paull's comments and market reaction to his speech.
Trade recommendations- out of the market