FX News - May 22

EUR/USD Soars Prior to Bernanke's Testimony

The EUR/USD is trading so far at 1.2930 today in anticipation of Federal Reserve Chairman Ben Bernanke's testimony before the Joint Economic Committee of Congress at 14GMT. The pair, which began the week at about 1.280 is now at its highest level so far this week.

Traders are keeping close watch on Mr Bernanke's testimony as this would help determine the fate of the USD in the long term. Any hints that the Fed is set to end its QE strategy would indicate that the US economy is finally recovering, which would be positive news for the USD. If the opposite happens, that is, if he recommends the continuation of the QE, it would hint that the US economy continues to be sluggish, which would consequently weaken the US dollar. Because of the importance of this statement, traders should expect a lot of volatility during the period.

Mr Bernanke's testimony would not be the only thing traders should look out for in the coming weeks. There are still key data to be released including May's ISM, and employment data in Early June.

Initial resistance for the pair is seen at 1.2968 followed by 1.3000. Meanwhile, initial support is at 1.2873, followed by 1.2841.

USD/JPY Moves within Narrow Range

On the other side of the Pacific, the USD/JPY has moved within a narrow range while waiting for the conclusion of the Bank of Japan's (BoJ) policy meeting today. While the BoJ is not expected to announce further cuts in the interest rates, traders await the statement from BoJ Governor Kuroda, which is set to happen later in the afternoon, Tokyo time.

The USD/JPY pair is currently trading around 102.60, after seeing highs of around 103.25 late last week.

Initial resistance for the pair is seen at 103.10, followed by 103.36. Meanwhile, initial support is seen at 102.27, followed by 102.02.