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Day 2 at the 2018 ECB Forum on Central Banking in Sintra, Portugal, will see the world’s most famous central bankers appear together in a panel discussion on ‘Macroeconomics of price and wage-setting’ at 1330 GMT. Top central banks’ heads participating includes – the Federal Reserve Chairman Jerome Powell alongside the ECB President Mario Draghi, BoJ Governor Haruhiko Kuroda and RBA Governor Philip Lowe.  

The central banking sphere will keep bond investors busy and with most majors stuck in tight trading ranges, any comments made in relation to central banks’ monetary policies should influence price action surrounding EUR, AUD, JPY and USD crosses.

Investors will keep an eye on Draghi

Last week the financial markets reacted sharply to the ECB’s announcement that it would keep interest rates low until the summer of 2019 and end its quantitative easing program by the end of 2018. With the ECB already making its stance clear about the timing for the first rate hike and the path towards ending its QE program, market reaction to Draghi’s comments is more likely to be muted. Having said that, any comments on mounting inflationary pressure in the region would be seen as hawkish and should place a near-term floor for the shared currency.

The EUR/USD pair has been finding support near the 1.1530 region and hence, any meaningful short-covering bounce could get extended back towards the 1.1600 handle. Any subsequent up-move might continue to confront some fresh supply near the 1.1640-45 region. Alternatively, a convincing break below the 1.1510-1.1500 immediate support now seems to open the door for an extension of the pair’s bearish trajectory towards testing its next major support near the 1.1450-45 area.