EUR/USD loses the grip and approaches 0.9900, focus on Jackson Hole

Further selling pressure forces EUR/USD to trade at shouting distance from the 0.9900 zone on Wednesday.

EUR/USD now looks to the 2022 low

EUR/USD sees its daily decline gather extra pace and approach the area of recent lows near 0.9900 and a tad below, always on the back of the relentless move higher in the US dollar.

The persistent advance in the buck, in the meantime, found extra fuel in the equally strong march north in US yields, where the belly and the long end of the curve navigate levels last seen in late June around 3.10% and 3.30%, respectively.

In the docket, US Durable Goods Orders came flat on a monthly basis in July, while orders excluding the Transport sector surprised to the upside and expanded 0.3% inter-month.

Also collaborating with the upside in US yields and the dollar appear consensus’ expectations of a hawkish message from Chair Powell at his speech at the Jackson Hole Symposium on Friday.

What to look for around EUR

EUR/USD returns to the 0.9900 region as the greenback rapidly left behind Tuesday’s hiccup.

Price action around the European currency, in the meantime, is expected to closely follow dollar dynamics, geopolitical concerns, fragmentation worries and the Fed-ECB divergence.

On the negatives for the single currency emerge the so far increasing speculation of a potential recession in the region, which looks propped up by dwindling sentiment gauges and the incipient slowdown in some fundamentals.

Key events in the euro area this week: Germany Final Q2 GDP Growth Rate, Germany IFO Business Climate, ECB Accounts (Thursday) – Germany GfK Consumer Confidence (Friday).

Eminent issues on the back boiler: Continuation of the ECB hiking cycle. Italian elections in late September. Fragmentation risks amidst the ECB’s normalization of its monetary conditions. Impact of the war in Ukraine on the region’s growth prospects and inflation.

EUR/USD levels to watch

So far, spot is losing 0.48% at 0.9920 and a break below 0.9899 (2022 low August 23) would target 0.9859 (December 2002 low) en route to 0.9685 (October 2022 low). On the other hand, the next up barrier comes at 1.0202 (high August 17) followed by 1.0267 (55-day SMA) and finally 1.0368 (monthly high August 10).