EUR/USD stays subdued near 1.1060 ahead of Powell

EUR/USD navigates within the familiar range so far today.
The pair moved a tad higher after Chines news on tariffs.
Markets remain focused on Powell’s speech at J.H.

Pablo Piovano FXStreet

The bearish mood around the shared currency stays well and sound at the end of the week, with EUR/USD managing to rebound somehow from earlier lows near 1.1050.

EUR/USD bounces on USD-correction, looks to Powell

Spot regained some traction (nothing serious though) after the Greenback faced some selling pressure in the wake of Chinese headlines citing retaliatory measures against the US, involving oil, autos.

Chinese headlines motivated US yields to recede to daily lows in the 1.60% neighbourhood and favoured the demand for safe havens, in turn driving USD/JPY (and the buck) lower.

Moving forward, Chief Powell’s speech at the Jackson Hole Symposium will grab all the attention. Investors will be looking for clues regarding the Fed’s plans regarding potential rate cuts in the next months, as well as Powell’s views on the US economy and the ongoing trade war.

What to look for around EUR

EUR has finally succumbed to the downside pressure although another test of YTD lows in the proximity of 1.1020 remains elusive for the time being. Renewed buying interest surrounding the buck, expectations of ECB easing and Italian politics are seen driving the mood around the shared currency at the moment. That said, sustained bullish attempts in the pair still look flimsy amidst ECB’s preparations for a fresh wave of monetary stimulus (most likely to be announced in September), including a potential reduction of interest rates, the re-start of the QE programme and a probable tiered deposit rate system. This scenario has been confirmed as of late following poor results from the euro-docket, adding to the unremitting deterioration of the economic outlook in the region.

EUR/USD levels to watch

At the moment, the pair is retreating 0.11% at 1.1066 and faces the next support at 1.1060 (low Aug.23) seconded by 1.1026 (2019 low Aug.1) and finally 1.0839 (monthly low May 11 2017). On the other hand, a breakout of 1.1132 (21-day SMA) would target 1.1213 (55-day SMA) en route to 1.1282 (high Jul.19).

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

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