EUR/USD sideways, supported by 0.9950 ahead of Fed Chair Powell’s speech
|- US dollar moving sideways on Thursday, DXY post marginal losses.
- Market participants await Powell’s speech on Friday.
- EUR/USD rejected from above 1.0000, supported by 0.9950.
The EUR/USD is moving without a clear direction on Thursday ahead of a key speech from Jerome Powell at the Jackson Hole Symposium. The pair failed to hold above parity and then pulled back, finding support above 0.9950.
The US dollar gained momentum following the release of US economic data. The Q2 GDP growth rate was revised higher from -0.9% to -0.6% and jobless claims declined more than expected. US yields peaked after the reports and then retreated.
Aside from the numbers, market participants await Powell’s speech to be delivered on Friday. His words could bring clarity regarding the path of the Fed’s monetary policy. “We expect Powell to try and manage market expectations by maintaining the Fed’s hawkish tone. Between now and the September 20-21 FOMC meeting, we will get all the major August data and some of the early September surveys such as the preliminary S&P Global PMI readings and regional Fed surveys. The Fed will also have a better idea then of how the economy is doing in Q3,” explained analysts at Brown Brothers Harriman.
Regarding the European Central Bank, the minutes from the latest meeting showed a “large number” of members agreed it was appropriate to raise interest rates by 50 basis points. “The ECB is now fully in a data-dependent mode with chains from past guidance severed. Most Governing Council members are preoccupied with inflation risks, and large rate hikes are set to continue,” said Jan von Gerich, Chief Analyst at Nordea.
Unable to recover 1.0000
The EUR/USD shows no clear signs in the very short term. The euro continues to show weakness by being unable to hold above 1.0000. A recovery surpassing 1.0030 would add support to the shared currency. On the flip side, the immediate support stands at 0.9950. A slide below would expose the next barrier around 0.9900.
The main trend in EUR/USD remains bearish and the euro still looks vulnerable. It is on its way to the second weekly slide in a row and the lowest close since November 2002.
Technical levels
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