EUR/USD treads water around mid 0.9900s with eyes on Jackson Hole

EUR/USD steadies around 0.9970 while fading the bounce off 0.9910, as well as cooling down the retreat from 0.9998, amid traders’ anxiety ahead of the Jackson Hole symposium speech from Fed Chair Jerome Powell. The major currency pair also struggled for clear directions after mixed US data and a lack of major comments from the ECB/Fed policymakers.

US Dollar Index (DXY) began Wednesday on a firmer footing before retreating towards 108.50 as equities pared recent losses amid a lack of too-strong US data. Also exerting downside pressure on the greenback’s gauge versus the six major currencies was the indecision among the latest Fedspeak and market chatters that Fed Chair Powell may repeat his economic fears and may refrain from too hawkish comments at the Jackson Hole Symposium.

Talking about the US data, Durable Goods Order for July dropped to 0.0% versus 0.6% expected and an upwardly revised 2.2% previous reading. However, Nondefense Capital Goods Orders ex Aircraft rose past 0.3% market consensus to 0.4%, versus 0.9% prior. Further, Pending Home Sales improved to -1.0% MoM in July versus -4.0% expected and -8.9% prior (revised down from -8.6%). On a yearly basis, the Pending Home Sales decreased by 19.9%, versus the previous contraction of 20.0%.

It should be noted that Minneapolis Fed President Neel Kashkari mentioned that the biggest fear is that we are misreading underlying inflation dynamics, per Reuters. The policymaker also added that the Fed can relax on rate hikes when compelling evidence of CPI heading toward 2% is seen.

On the other hand, an influential economist Marcel Fratzscher of the German Institute for Economic Research mentioned, per Reuters, “The economic impact on Germany of Russia's invasion of Ukraine will last years.”

Elsewhere, Sara Johnson, Executive Director of Economic Research at S&P Global Market Intelligence, said in a statement on Wednesday, that global growth is likely to remain subdued in late 2022 and 2023 while inflation is seen moderating over the next two years.

Amid these plays, the US 10-year Treasury yields rose the most in a week while refreshing a two-month high around 3.10% whereas the Wall Street benchmarks printed mild gains.

Moving on, Final readings of Germany’s second quarter (Q2) GDP and the second version of the US Q2 GDP will join the US Personal Consumption Expenditure (PCE) for the said period to decorate the calendar. Also important to watch will be the monthly prints of Germany’s IFO sentiment figures. However, major attention will be given to Jackson Hole for fresh impulse.

Technical analysis

Doji candlestick at the multi-year low joins nearly oversold RSI to suggest that the EUR/USD bears are running out of fuel.