U.S. Federal Reserve Chairman Jerome Powell will be giving a testimony today, highlighting the Greenback as the currency to watch for today’s session.
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Fresh Market Headlines & Economic data:
- U.S. Consumer Confidence Rises in February to 131.4 versus 121.7 in January
- No-deal Brexit or short delay? British PM May offers lawmakers a choice
- German consumer sentiment seen stable: GfK
- Philadelphia Fed services sector index 10.0 in Feb
- U.S. Housing starts tumble to lowest level in more than 2 years
- U.S. Home prices in December rose at the slowest pace since August 2015: S&P Case-Shiller index
- Bank of Japan Core CPI rises to 0.5% versus 0.4% previous
- Statistics Canada’s Quarterly financial statistics for enterprises shows a -3.9% drop in the fourth quarter 2018
- Oil prices steady after steep drop on Trump’s OPEC tweet
Upcoming Potential Catalysts on the Forex Calendar:
- Fed Chair testifies on Monetary Policy Report to Senate Banking Committee at 3:00 pm GMT
- New Zealand Trade Balance at 9:45 pm GMT
- Australian Construction Work at 12:30 am GMT (Feb. 27)
What to Watch: USD/JPY
Today’s potentially big event of the session is the upcoming testimony from U.S. Federal Reserve Chairman Jerome Powell to the Senate Banking Committee (watch live here), in Washington DC on the semiannual Monetary Policy report. It’s not likely we’re going to hear anything we haven’t heard from recent Fed speak or what’s in the current report that was released last week, but whenever the Fed Chair speaks, you gotta pay attention.
So, without knowing whether or not the event will be a dud or will spark a significant move, staying in reactionary mode is probably the best move. But for those who are looking for some action, the setup on one hour chart of USD/JPY up above is something to throw on the watchlist.
Going back two weeks, the 110.60 handle has been as strong area of interest, acting as both support and resistance since roughly Feb. 12. For the bears, a break there on dovish commentary from Jerome Powell could draw in buyers all the way down to the 110.00 psychological handle, which is about a one daily ATR.
For the bulls though, 110.60 has been a support level and if you’re leaning risk-on in your overall global risk sentiment bias, that 110.60 could be a long entry if Powell testimony surprises traders with hints of rate hikes or maintaining the Fed’s balance sheet run off. But the potential run higher might be more limited than a down move given the strong resistance around 111.10 – 111.20.
And for those who can’t pick a bias but might want to try to capture any volatility if it happens, a straddle strategy may be something to consider, especially with USD/JPY trading in a pretty tight range of roughly 20 pips (minus that fakeout break higher yesterday).