EUR/USD analysis: Markit PMIs and Jackson Hole to set the tone this week
|EUR/USD Current price: 1.1759
The EUR/USD pair closed the week in the red at 1.1759, after rallying for five consecutive ones, but off the low set on Thursday at 1.1661, following the release of ECB's account of the monetary meeting that took place last July. The document indicated that the ECB is concerned that EUR's strength could delay the timing on reaching their inflation rate of below, but close to 2%. The news came after an early week headline coming from Reuters, indicating that Mario Draghi won't discuss monetary policy in the upcoming Jackson Hole meeting, both pouring cold water on hopes for soon-to-come tapering in the EU. Dollar's gains were limited as the FOMC Minutes, also released this past week, indicated that policymakers are split over what's next for rates, concerned over soft inflation, but still willing to reduce its balance sheet on "an upcoming meeting."
This upcoming week, the release of preliminary Markit August PMIs for Europe and the US will gather most of the market's attention, alongside with the Jackson Hole Symposium, where worldwide policymakers will meet to discuss economic policy. Investors will be looking for clues on tightening, particularly coming from Yellen and Draghi.
Ever since reaching this year's high at 1.0900 late July, the pair has been on retreat mode, but given that the pair has barely eased around 150 pips, it's too early to call for a trend-reversal. The movement remains corrective, mostly due to the absence of dollar's demand, amid softer inflation which reduced chances of a third rate hike for this year. Nevertheless, the corrective movement can extend during the next few days, as in the daily chart, the price has been unable to recover above a horizontal 20 DMA, while a daily descendant trend line coming from the mentioned high stands now around 1.1800. The Momentum indicator in the mentioned chart is losing its bearish strength, but still heading south within negative territory, while the RSI indicator hovers around 55, with no certain directional strength. Shorter term, and according to the 4 hours chart, the pair presents a neutral stance, with technical indicators flat within positive territory and the price trapped between its 20 and 100 SMAs, both directionless. The 1.1820/30 price zone is the key resistance to overcome to open doors for a new leg higher towards the mentioned yearly high.
Support levels: 1.1715 1.1685 1.1650
Resistance levels: 1.1820 1.1860 1.1910
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