Quiet week beckons for forex, but some markets movers could emerge
This week is the last full week of trading this year, which means that liquidity and volatility are likely to go through their seasonal decline. Nonetheless, there are still some events that could move markets this week.
Though trading could be quite range-bound this week for most of the majors, there are some events, which could move JPY, USD and GBP.
These include US building permits on Tuesday, Mark Carney governor of the Bank of England speaks on Wednesday, which could be important for GBP and on that day the Bank of Japan releases its monetary policy statement and later holds a press conference. On Thursday it’s final quarterly GDP and weekly unemployment claims and Friday sees the UK current account deficit and core US durable good orders.
Outside the scheduled news calendar there are always unexpected events that could move the markets. In the US, there is the ongoing debate and legislation over tax reform, which so far seems to be progressing well and is a USD positive and for GBP there is the ongoing Brexit saga. As the year draws to a close Brexit dramas should recede, only to kick off again in the New Year. However, there is still potential for problems from the UK parliament and also for clashes between the UK and EU, which could unsettle GBP.
TECHNICAL ANALYSIS: EUR/USD - range bound week expected
There’s always the possibility of some unexpected event to upset the status quo, but overall it looks like the rest of the year should see EUR/USD in a range bound territory.
There are arguably two ranges on EUR/USD - a smaller short-term one that is around 1.1731-1.1860 and a wider more durable one around 1.1586-1.1931. It’s unlikely this wider one will be breached during the remainder of this year - particularly on the downside.
Meanwhile, the loss of volatility will see many of the technical indicators gravitate towards neutral readings.
Support can be seen at 1.1669, 1.1650 and 1,1586 with resistance pegged around 1.1825, 1.1865 and 1.1931.
By Justin Pugsley, Markets Analyst, MahiFX