FX.co ★ Today volatility in the markets will grow significantly

Today's event - the speech of the leaders of some of the world's leading central banks- Fed and the ECB- remains at the center of attention of world markets. And although there are opinions that they are unlikely to have a strong influence on investor sentiment, we will only allow ourselves to agree with this partially.

Most likely, M. Draghi, the president of the ECB, and J. Yellen, the head of the US Federal Reserve, will focus in their speeches on general issues of the world economy. They will be optimistic, but they will also not avoid the theme of the risks from low inflation, which may affect not only the world economic growth, but also the economies of the eurozone and America.

The market, however, will expect from them not these topics, but the prospects of monetary and credit policies. Investors will listen attentively to the words of M. Draghi, wishing to hear something pointing to the ECB announcement at the September meeting on the end of the euro zone economic stimulus programs in 2018. If he does this, then clearly this will be the reason for the continued growth of the single currency. But, in our view, the head of the ECB will try to prevent this and, perhaps, even try to exert verbal pressure on the euro, which since the beginning of the year has added more than 10% and already began to have a negative impact on European export-oriented companies.

They are also waiting for signals from J. Yellen. The market wants to hear confirmation of whether there is a course to continue raising interest rates. If she even slightly hints at the problems which could interfere with this process, indicating them not as transitory but rather serious and having temporary prospects, then the US dollar, already under pressure on the wave of political wars in the States, will resume the downward trend. At the same time, if the speech is more optimistic and allows itself to disclose some details of the future reduction of the Fed's balance sheet, the dollar may, on the contrary, grow domestically.

In general, watching the mood prevailing in financial markets, it is noted that today the markets can become quite volatile, attempting to follow news and information traffic.

Forecast of the day:

EURUSD is trading in the range of 1.1685-1.1825. It is expected that it may be under pressure if Draghi's statement is negative for the euro, and Yellen's speech, on the contrary, is more optimistic. Against this background, the price may fall to the lower limit of the range of 1.1685.

The GBPUSD pair found support at 1.2775. It still could not adjust to the level of 1.2890. It is likely that on the wave of the speech of J. Yellen, as well as M. Carney, the Governor of the Bank of England, the pair will resume the decline to 1.2700, breaking the 1.2775 mark.