At the beginning of this week's trading, the price of the EUR/USD currency pair tried to rebound to the upside and stop its recent losses. It affected the support level 1.0845, but the rebound gains did not exceed the level of 1.0913. It settled around the level of 1.0895 at the beginning of the Tuesday session. As I mentioned, the movement will remain in narrow ranges until the reaction of markets and investors to the statements of US Federal Reserve Governor Jerome Powell and then European Central Bank Governor Lagarde during the Jackson Hole Symposium.
The main economic event this week is likely to be Fed Chair Jerome Powell's speech on Friday. The Jackson Hole, Wyoming, venue where he will deliver his speech has been the site of major policy announcements in the past by the Federal Reserve and is one of the most important events each year for global central bankers.
- The concern is that Powell will dash investors' hopes that the Fed has indeed raised US interest rates for the last time and that his next move will be to cut interest rates early next year.
- The Fed has already pulled its key interest rate to its highest level since 2001 in an effort to bring down soaring inflation.
- High rates do this by outright slowing down the entire economy and hurting investment prices.
Despite all the anticipation for Powell's speech, it may not end up sending a strong signal from Jackson Hole, according to Goldman Sachs.
In the minutes of its last policy meeting in July, the Fed indicated that it was unsure of its next move. He said he will make the next interest rate decisions based on what the incoming data says about inflation and the economy. A major report on each of these topics is scheduled for the week following Powell's speech. One is the latest update of the Fed's preferred inflation measure, and the other is the monthly US jobs report.
Meanwhile, economists at Bank of America say, there is a chance that Powell will say that every upcoming Fed meeting has the potential to see a rise in interest rates given how strong the recent economic reports have been. "We believe Powell's tone in Jackson Hole will be less balanced than the minutes of the FOMC meeting in July," they wrote in a Bank of America global research report.
The US economy remained resilient despite the huge interest rate hike. While a strong labor market and US household spending ease long-running concerns about a potential recession, they may also add to upward pressure on inflation.
Euro predictions against the dollar today:
There is no change in my technical view of the performance of the price of the euro currency pair against the dollar, EUR/USD. The general trend of the currency pair is bearish, and according to the performance on the daily chart below, the US dollar continues to gain amid hints from US Federal Reserve officials to continue tightening the bank's policy.
This may push the euro currency pair /USD towards stronger support levels, and it does not rule out moving towards the next psychological support level 1.0800. On the other hand, and for the same period of time, the EUR/USD currency pair will not have an opportunity to rebound to the upside without moving towards the resistance levels 1.0940 and 1.0100, respectively. The currency pair may remain in a narrow range until the reaction to what will be reported from the Jackson Hole Symposium.
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