EUR/USD Forecast: Gentle glide ahead of Jackson Hole

The EUR/USD bounced from the lows but the trend is to the downside.
Powell's Jackson Hole speech is highly anticipated and already causes tension.
Trade fears could take over after the US-Chinese talks ending inconclusively.

Yohay Elam FXStreet

The EUR/USD is trading in the mid-1.1500s, holding onto the limited range. The pair is marginally higher on the day after falling on Thursday. The Fed's optimism in the FOMC Meeting Minutes on Wednesday supported the greenback. In addition, anticipation for a repeat of the hawkish message from Fed Chair Jerome Powell also buoys the greenback.

The central bank seems to reject pressures from President Donald Trump to maintain lower interest rates. Officials are fiercely defending their independence. A rate hike in September is basically priced in, so Powell will likely talk about other long-term topics.

See: Powell's Jackson Hole Speech: Three topics to watch out for beyond the September hike

Trade is one of the topics on the agenda in the Wyoming gathering, and the conference comes just after US-Sino talks have ended inconclusively. The failure of the talks comes one day after the US slapped tariffs on an additional $16 billion worth of Chinese goods on Thursday. China retaliated with tit-for-tat tariffs. The moves were well-telegraphed in advance, but some had hoped that the new duties would be suspended while talks were going on.

The Trump Administration plans to impose far greater levies on no less than $200 billion of Chinese goods in early September. The topic could top the agenda after the dust from the Jackson Hole gathering settles.

Before Powell's speech, the US publishes the Durable Goods Orders for July. The data feeds into Q3 GDP which may be slower than Q2. See US Durable Goods Orders preview: activity seen easing in July

See how to trade the event with the EUR/USD

EUR/USD Technical Analysis

The EUR/USD is trading in a downward channel in the past few days after topping out at 1.1625. Momentum has petered out but the Relative Strength Index is still slightly above 50. Apart from downtrend resistance, the 200 Simple Moving Average on the four-hour chart also looms above the price.

The EUR/USD has support at around 1.1530, the lows seen on Thursday. Further down, 1.1495 was a swing low earlier in the week. 1.1445 capped the pair on its way up last week.

1.1600 is a round number and was also a swing high on Monday. 1.1625 was the high point this week. The 1.1665 level separated ranges in early August.

Author

Yohay Elam

FXStreet

Yohay is in Forex since 2008 when he founded Forex Crunch, a blog crafted in his free time that turned into a fully-fledged currency website later sold to Finixio.

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