EUR/USD approaches key support near 1.0760, German data, ECB vs. Fed play at Jackson Hole eyed

EUR/USD takes offers to refresh 2.5-month low near 1.0780 heading into Friday’s European session as market players await Jackson Hole speeches from European Central Bank (ECB) President Christine Lagarde and Federal Reserve (Fed) Chairman Jerome Powell. Apart from the pre-event anxiety, the recently upbeat US economic concerns and comparatively more hawkish Fed talks, as well as an absence of recession woes in the US, also add strength to the Greenback and weigh on the Euro pair.

Earlier in the day, ECB policymaker and Bundesbank Chief Joachim Nagel joined Croatian National Bank Governor and the ECB Board Member Boris Vujčić to defend the hawkish bias about the bloc’s central bank. However, fears of economic stagnation were cited to highlight the data dependency, which in turn favored the Euro bears.

On the other hand, former St. Louis Fed President James Bullard and the current Boston Federal Reserve President Susan Collins appeared hawkish in their speeches at the Jackson Hole interviews. Though, Federal Reserve Bank of Philadelphia President Patrick Harker teased an end of the rate hike trajectory and prod the Greenback buyers during the initial hours of the day.

However, the fresh run-up in the US Treasury bond yields toward the multi-year high marked on Tuesday underpins the fresh US Dollar run-up as market players anticipate Fed Chair Powell to push back against the rate cut bias and defend the “higher for longer” rates.

Additionally, upbeat details of the US Durable Goods Orders for July and firmer mid-tier activity data, as well as employment clues, also allowed the US Dollar Index to reverse the pullback from 11 weeks marked on Wednesday.

Against this backdrop, the US Dollar Index (DXY) rises to a fresh high since June 07, to 104.28 by the press time, after jumping the most in a month to renew the multi-day peak the previous day. That said, S&P 500 Futures remain depressed around 4,385 after falling the most since December 2022 the previous day, while the US 10-year Treasury bond yields reverse the previous pullback from the highest level since 2007, up two basis points (bps) to 4.25% by the press time.

Moving forward, the final readings of Germany’s second quarter (Q2) Gross Domestic Product (GDP) will precede the nation’s IFO sentiment data for August to entertain the EUR/USD traders. Following that, the mid-tier US sentiment and inflation clues will also entertain the intraday traders.

Above all, speeches from ECB’s Lagarde and Fed Chair Jerome Powell will be crucial to watch for clear directions.

Technical analysis

An ascending support line from March 15, close to 1.0765 by the press time, appears the key support for the EUR/USD bear to break to keep the reins. Otherwise, the oversold RSI may play its role and trigger a corrective bounce toward the 200-DMA, close to 1.0805 by the press time.