Crawls Back as US Bond Sell-Off Gains

The EUR/USD pair rebounded as most investors started focusing on the upcoming Jackson Hole Symposium. 

• Buy the EUR/USD pair and set a take-profit at 1.100.
• Add a stop-loss at 1.0845.
• Timeline: 1-2 days.

• Set a sell-stop at 1.0880 and a take-profit at 1.0800.
• Add a stop-loss at 1.0950.

The EUR/USD pair drifted slightly as market participants bought the dip after it dropped to a multi-week low of 1.0844 last week. It recovered to a high of 1.0900 as US bond yields continued rising.

The EUR/USD pair rebounded as most investors started focusing on the upcoming Jackson Hole Symposium. This meeting of key central bank executives will provide more information about what to expect in the coming months. Historically, this meeting tends to have impact across all assets like forex and stocks.

The meeting comes at a tough time for the market. In the US, a bond market sell-off is underway that has pushed yields of longer-term bonds to the highest level in more than a decade. The 10-year yield rose to 4.33% while the 30-year jumped to 4.46%.

At the same time, it comes at a time when the Chinese economy is slowing dramatically. Data published last week showed that key numbers like industrial production, manufacturing output, and retail sales are growing at a slower rate. The yuan has fallen while Chinese stocks have underperformed their global peers.

China has also entered a period of deflation and balance sheet reduction among individuals and companies.

Meanwhile, data published on Monday showed that the German producer price index (PPI) dropped in July. It slipped by 1.1% during the month, the biggest decline since late 2020. However, the soaring energy prices will likely lead to higher prices in the near term.

There will be no economic data from Europe on Tuesday. The only economic number to watch will be US existing home sales numbers. Economists polled by Reuters expect the data to show that sales dropped to 4.15 million. The pair will also react to statements by Fed officials like Tom Barkin, Michele Bowman, and Austan Goolsbee.

The EUR/USD pair has staged a comeback in the past few days. It has moved above the upper side of the falling wedge pattern that is shown in black. The pair has jumped above the 25-period moving average and is slightly below the important resistance point at 1.0912, the lowest point on August 3rd.

Further, the Stochastic Oscillator has moved closer to the overbought level. Therefore, the pair will likely continue rising, with the next reference level to watch being at 1.100.

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