Since the start of trading this week, the price of the EUR/USD currency pair has stabilized around the psychological support level of 1.0800. This is based on its recent losses, which reached the lowest support level of 1.0765 for the currency pair in more than two months. The losses came in the first place amid a strong rise in the price of the US dollar supported by the path of tightening the policy of the US central bank.
The trajectory will remain downward until the announcement of the American job numbers at the end of the week.
The European Central Bank has not been able to overcome inflation and may need to raise interest rates again in September, according to European Central Board member Robert Holzmann. The Austrian governor said in an interview with his fellow hawks, who are also demanding another increase in borrowing costs, that the economy is not in danger of recession, and the tight labor markets mean that labor unions may achieve large wage increases. Holzman added: "We are not yet clear about inflation," adding that he will monitor all incoming information to assess risks to prices. "If there aren't any big surprises, I see a need to go ahead with raising interest rates without stopping."
The remarks in the Austrian mountain village of Albach fueled a heated debate over one of the most hotly contested decisions since the European Central Bank began raising interest rates in July last year, as officials judge whether the economy is weakening enough to suppress inflation, or whether they need to submit another elevation. And Holzman has long been one of the most hard-line policy makers. Colleagues from Germany and Latvia - Joakim Nagel and Martins Kazaks - indicated in Bloomberg television interviews last week in Jackson Hole, Wyoming, that they are leaning towards another increase as well.
Portugal's Mario Centino, a more pessimistic official, responded that emerging downside risks require caution. But Holzman believes this is not a moment for hesitation. Where he said: "It is better to achieve the peak rate faster, which also means that we can eventually start the decline earlier." And "it is difficult for the markets to absorb the path of stop-and-go prices."
He added that the European Central Bank is still "somewhat backward" in the fight against inflation. Asked if that meant interest rate hikes could continue beyond September, Varda said, "Once we get to 4%, we'll discuss that again."
European Central Governor Christine Lagarde, in a keynote speech she gave in Jackson Hole on Friday, avoided sending any clear signals about the next decision to the European Central Bank - although she realized that inflation is still undefeated in the Eurozone.
Updated euro zone consumer price figures for August are due to be released on Thursday, while the final assessment of the region's economic performance in the second quarter will be available one week later. Holzman added: "The economy is not as good as we had hoped, but at the same time, the slowdown is not so great that we need to talk about falling into recession." And "we are looking at a stagnant economy." He added that against this background, the European Central Bank should consider speeding up the process of dismantling its general budget. While the bonds bought under an old program are currently allowed to start running, reinvestments under its pandemic program – PEPP – are expected to continue until at least the end of 2024.
Expectations of the euro against the dollar today:
- There is no change in my technical point of view.
- The performance on the daily chart below is still the general trend of the EUR/USD currency pair downwards.
- Breaking the psychological support 1.0800 confirms the bears' control over the trend and at the same time moves the technical indicators towards strong selling saturation levels.
- I prefer to think about buying the euro/dollar pair without risking from the support levels 1.0720 and 1.0645 respectively.
On the other hand, there will be no reversal of the current downtrend for the EUR/USD currency pair without returning to the psychological resistance of 1.1000 again.
The currency pair will be affected today by the announcement of American consumer confidence and American job opportunities.
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