Bears’ Control in Important Week

During last week’s trading, the bears increased the pressure on the performance of the EUR/USD currency pair, with losses affecting the support level 1.0845, its lowest in a month and a half. The US dollar is still the strongest with expectations of the path of tightening the policy of the US Federal Reserve. This was confirmed by the content of the minutes of the last meeting of the US Federal Reserve. US Federal Reserve Momentum increased from the results of US economic data, which ruled out the hypothesis of a violent US economic recession due to the Federal Reserve’s policy.

With the close of trading this month, which means that we are heading to Jackson Hole to attend the annual symposium of the US Federal Reserve in Kansas City, which is attended by senior officials of the world’s central banks. As always, everyone is privately wondering what Fed Chairman Jerome Powell – who is expected to speak Friday morning – might say.

Last week, the US central bank published the minutes of its July policy meeting, and the record showed that at that time, most Fed officials saw a significant upside risk to inflation, which in turn could require further tightening. On the other hand, two also favored holding rates steady, indicating the first real sign of disagreement about the way forward that we’ve seen in some time.

Since that meeting, key data points have shown price and wage pressures continuing to dissipate, which should strengthen the case for ending price increases. But we also saw continued strength in indicators of labor market activity and consumer spending, which may keep policymakers uneasy about prospects for a sustained reduction in inflation.

More generally, clarity about how Powell might weigh these developments is a critical question. Moreover, any clues about how the US central bank might consider a plan to cut interest rates in 2024 will also get a lot of attention. Otherwise, attendees will enjoy robust discussions on “Structural Transitions in the Global Economy,” the official theme for this year’s symposium.

Away from Jackson Hole, the US economic data calendar is light and includes reports on previously owned home sales, new home purchases and durable goods orders.  European Central Bank President Christine Lagarde will speak in Jackson Hole on Friday – with everyone focused on possible hints about what might happen in September. It said in July that either another rate hike or suspension was possible. Economists rely on the former, while markets are less convinced.

• The general trend of the EUR/USD currency pair is still bearish.
• The opportunity for the bears to move in the currency pair towards the psychological support level of 1.0800 appears.
• Among them, and those that are lower than them, technical indicators will rush towards strong oversold levels.
• The next levels for performance may reach 1.0745 and 1.0680 if the US dollar continues its strength.

On the other hand, and for the same time period, there will be no bullish bias for the EUR/USD pair without returning to the vicinity of the psychological resistance 1.1000 again. Forex currency markets are on an important date this week, as the US Federal Reserve will hold a Jackson Hole symposium, which will include the heads of global central banks, and all eyes will be on Jerome Powell and Lagarde.

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