- The EUR/USD outlook remains subdued under 1.1600 on Friday.
- Fading bets on Fed’s aggressive easing continue to support dollar.
- Market participants await Powell’s speech at the Jackson Hole Symposium.
The EUR/USD outlook remains subdued as the price is headed downwards today during the European session, trading under the key level of 1.1600. The pair is on course to post a weekly loss of about 1% as traders adopt a wait-and-see approach before remarks by Federal Reserve Chair Jerome Powell at the Jackson Hole Economic Symposium.
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Powell is expected to make the speech about the Economic Outlook and Framework Review at 14:00 GMT, and this speech is likely to outline the market’s outlook in the coming weeks. Traders will pay attention to any new directions when the Fed might provide the first interest rate reduction in 2025, as well as the speed of the probable easing that may follow.
In July, the Fed held rates unchanged between 4.25% and 4.50% at its policy meeting, with two Governors highlighting the arguments. Waller claimed that price pressures caused by tariffs would be temporary, and Bowman emphasized deteriorating growth and labor conditions to justify starting the gradual cuts.
New data released this month has only compounded this uncertainty in the US NFP. In July, the nonfarm payrolls came in at only 73,000, and the previous months were revised lower, strongly pointing to a weaker labor market. CPI and PPI indicators at the same time pointed to sticky inflation, and the markets were left wondering how much and how quickly the Fed can ease. The possibility of a September rate cut is back at about 75%, according to the CME FedWatch tool, well below a peak of over 90% earlier in the month.
Preliminary US PMI data on Thursday was a source of optimism, at least on the manufacturing front. Still, a rise in jobless claims added evidence of fragility in the employment sector. Conflicting views from Fed representatives also contribute to market uncertainty, as some of them focus on the risks of inflation, whereas others raise the prospect of an economic contraction.
Looking ahead, EUR/USD is likely to stay under pressure until Powell’s speech provides clarity. A cautious tone could extend Dollar strength, while dovish surprises may offer the Euro some relief. For now, downside risks dominate as markets demand firm policy direction.
EUR/USD technical outlook: Bears aiming for 1.1525
The 4-hour chart for the EUR/USD shows two bearish crossovers of 20/50 and 20/200 MAs. The price has now moved below the 100-period MA as well. However, the MA is still pointing upwards. The key support at 1.1600 is broken with eyes on the next support of 1.1525. Meanwhile, the RSI is below 50.0 but above the oversold zone, suggesting more room for losses.
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Conversely, the pair may shed off bearish pressure and look to continue the rally if the price moves above the 20-period MA at 1.1640. The next resistance to watch would be 1.1700.
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