EUR/USD eases below 1.0000 as traders await Fed’s preferred inflation measure, Jackson Hole speeches


  • EUR/USD fades recovery from nearly two-decade low, renews daily low of late.
  • ECB v/s Fed divergence joined US data to underpin previous recovery moves.
  • Geopolitical headlines, anxiety ahead of key data/events weigh on prices.
  • Statistics from Germany, US will decorate calendar but Powell’s defense of hawkish moves will be the key.

EUR/USD returns to the bear’s table, after hiding in the last three days, as it drops to 0.9965 during Friday’s Asian session. The major currency pair’s latest weakness could be linked to the headlines surrounding the European Central Bank (ECB) and the cautious mood ahead of Fed Chairman Jerome Powell’s speech at the Jackson Hole Symposium, not to forget the key US PCE inflation data.

Reuters quoted anonymous sources late Thursday to signal that the ECB reinvestments could continue with the rate hikes, which challenges the EUR/USD hawks amid fears of more inflation in the bloc. Also exerting downside pressure on the quote could be the headlines surrounding China, Taiwan and Iran.

According to Reuters, the US suspends 26 Chinese carrier flights in response to China's action, which renews the Sino-American tension and underpins the US dollar’s safe-haven demand. On the same line could be Taiwan’s increased military budget and a jump in the number of US diplomats visiting Taipei. Furthermore, a letter went viral quoting US President Joe Biden as saying, “The US struck Iran-backed forces in Syria to safeguard American civilians both at home and abroad,” which also challenged the previous risk-on mood.

It should be noted that the mixed prints of Germany’s IFO numbers and an upward revision to the nation’s Gross Domestic Product (GDP) for the second quarter (Q2) joined the hawkish European Central Bank's (ECB) July policy meeting accounts to favor the bulls previously.

On the other hand, firmer US data and mixed Fedspeak failed to impress US dollar bulls. Additionally, weighing on the greenback could be China’s near one trillion stimulus.

While portraying the mood, Wall Street marked the biggest daily jump in a week while the US 10-year Treasury yields dropped back to 3.03%, after rising to 3.10% the previous day. That said, the S&P 500 Futures dropped 0.10% intraday by the press time.

Moving on, EUR/USD moves depend upon how well Fed Chairman Jerome Powell could defend the hawkish moves at the annual Jackson Hole speech.

Also important will be the US Core Personal Consumption Expenditure (PCE) Price Index for July, the Fed’s preferred inflation gauge. Forecasts suggest that the YoY print is to ease to 4.7% from 4.8% while the monthly figures may drop to 0.3% while 0.6% prior. It should be noted that Germany’s GfK Consumer Confidence Survey details for September, expected -31.8 versus -30.6 prior, could also direct immediate EUR/USD moves.

Technical analysis

A two-week-old descending trend line, at the parity level of 1.0000 by the press time, restricts short-term EUR/USD upside. That said, the bears are on the way to 0.9900 threshold, for now, before eyeing the 61.8% Fibonacci Expansion (FE) of the pair’s May-August moves near 0.9855.

Additional important levels

Overview
Today last price 0.9965
Today Daily Change -0.0009
Today Daily Change % -0.09%
Today daily open 0.9974
 
Trends
Daily SMA20 1.015
Daily SMA50 1.0237
Daily SMA100 1.044
Daily SMA200 1.0834
 
Levels
Previous Daily High 1.0034
Previous Daily Low 0.9949
Previous Weekly High 1.0268
Previous Weekly Low 1.0032
Previous Monthly High 1.0486
Previous Monthly Low 0.9952
Daily Fibonacci 38.2% 1.0001
Daily Fibonacci 61.8% 0.9981
Daily Pivot Point S1 0.9938
Daily Pivot Point S2 0.9901
Daily Pivot Point S3 0.9853
Daily Pivot Point R1 1.0022
Daily Pivot Point R2 1.007
Daily Pivot Point R3 1.0107

 

 

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