Today begins the long-awaited, crucial event for the future of the US dollar – the Jackson Hole symposium; specifically the speech from Jerome Powell. Today is the day that we should find out the Fed’s sentiment towards the USD and their outlook on monetary policy. In a few hours, we will find out who will win the mid-term battle, hawks or doves. With this situation, there is no surprise that currently, on most instruments, we have a sideways trend. Most of the assets are calmly waiting for a trigger.
The first instrument of this kind is oil, which is obviously strongly affected by sentiment towards USD. From April to August, Brent was stuck inside of a big symmetrical triangle pattern. The beginning of August brought us a bearish breakout, and now we are back inside a symmetrical triangle. This time, however, the pattern is a bit smaller. The way to trade it is simple: a stronger USD will cause a breakout to the downside, so a sell signal and weaker USD, will cause a breakout to the upside, so a signal to go long.
Since we’re talking about oil, we should mention the Canadian dollar, which is one of the biggest commodity currencies. USDCAD is our next instrument and here we are also waiting for higher volatility. The pair is forming a triangle too, but in this case an ascending one, which is promoting a breakout to the upside. Anything can happen, though, so we should also be prepared for a breakout of the lower line of this pattern.
Last but not least is the EURUSD, where sellers are trying to gain control before the speech from the FED Chairman. The price is still locked inside of a sideways trend (rectangle) but the pressure to the downside is rising. It looks that sellers are determined to set the new weekly lows ahead of the main event in Jackson Hole.