Bearish view
- Sell the EUR/USD pair and set a take-profit at 1.0700.
- Add a stop-loss at 1.0850.
- Timeline: 1-2 days.
Bullish view
- Set a buy-stop at 1.0825 and a take-profit at 1.0915.
- Add a stop-loss at 1.0725.
The EUR/USD pair reacted mildly to the relatively hawkish statement by Jerome Powell, the Federal Reserve chair, at the Jackson Hole Symposium. It remained intact at 1.0800, where it has been at in the past few days. This price is ~4.20% below the highest point in July.
Inflation and jobs data ahead
The EUR/USD remained in a tight range after Jerome Powell insisted that the Fed was not done with its rate hikes. In his statement, he argued that inflation remained stubbornly higher than its target of 2.0%.
The most recent data showed that the headline consumer price index (CPI) rose from 3.0% in June to 3.2% in July. Core inflation, which excludes the volatile food and energy products, dropped to 4.7% during the month.
The statement came at a time when America’s bond yields and mortgage rates have jumped to the highest point in over a decade. At the same time, credit card delinquency rate has started rising.
Christine Lagarde, on the other hand, remained mum about the next actions of the European Central Bank (ECB). In a previous statement, she said that Europe’s interest rates would stay as high as needed to fight against inflation.
The next important economic data will come out on Tuesday when the US publishes the latest consumer confidence data. Economists believe that the figure by the Conference Board will reveal that confidence slipped from 117 in July to 113.4 in August.
The US will also release the JOLTs job openings data on Tuesday. Job openings have remained above 9.7 million in the past few months. These numbers will come out ahead of the upcoming US PCE inflation and non-farm payrolls (NFP) data. There will be no important data from Europe.
EUR/USD technical analysis
The EUR/USD pair has been in a strong bearish trend in the past few weeks. On the 4H chart, the pair has formed a descending channel and is still below the 25-period and 50-period moving averages. It has also dropped below the key resistance point at 1.0913, the lowest level on August 3rd. It flipped the crucial support at 1.0836 (July 6) into a support.
Therefore, the pair will likely continue falling, with the next key level to watch being at 1.0700. The stop-loss of this trade will be at 1.0852.
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