EUR/USD Analysis Summary Today
- Overall Trend: Neutral with an upward bias.
- Support Levels Today: 1.1640 – 1.1560 – 1.1490.
- Resistance Levels Today: 1.1720 – 1.1800 – 1.1880.
EUR/USD Trading Signals:
- Buy EUR/USD from the 1.1580 support level, with a target of 1.1800 and a stop-loss at 1.1500.
- Sell EUR/USD from the 1.1785 resistance level, with a target of 1.1500 and a stop-loss at 1.1860.
EUR/USD Technical Analysis Today:
The EUR/USD pair is still trading in a limited, cautious, and neutral-to-bullish range. According to reliable trading platforms, the euro’s half-percent gain against the dollar last Friday was a strong reminder that the single currency continues to attract solid buying interest on any dips. As the EUR/USD heads for another climb in August, a move past the 1.1735 resistance, and from there to the psychological peak of 1.1800, is possible this week. Success, however, will depend on whether Ukraine and Russia make progress toward a peace agreement and whether Jerome Powell meets market expectations for a September rate cut.
According to forex trading experts, this week will be dominated by Ukrainian peace talks and Federal Reserve Chair Jerome Powell’s speech at the Jackson Hole Economic Symposium on Friday. Given these risks, the chart shows the EUR/USD pair is on the rise again. Our weekly forecast model is positive, as the EUR/USD is holding above the nine-day exponential moving average (EMA), which is currently at 1.1664 and rising. Above this level, our outlook for the week is positive. The Relative Strength Index (RSI) is also above 50, although it appears somewhat stable, which may reflect the consolidation we saw last week.
Overall, this consolidation in the rebound is embodied by the 61.8% and 78.6% Fibonacci retracement levels of the July and August declines. However, the move is upward, and we expect a breakout of the 1.1735 resistance level. To continue the upward trend, we need to break the 78.6% level, from which the July 24 high of 1.1788 becomes clear, followed by the psychological high of 1.1800.
Stronger Factors Influencing Currency Prices
Apart from technical analysis, we have some important risks to consider.
The first is the meeting at the beginning of the week between US President Donald Trump and Ukrainian President Volodymyr Zelensky. Markets are already anticipating progress, as volatility indicators have dropped significantly in recent days, which is expected to support the EUR/USD. The surge in oil and gas prices in the summer of 2022, and the negative terms-of-trade shock for the Eurozone, caused the EUR/USD pair to fall below parity. Unless the Ukraine-Russia negotiations completely collapse and Trump’s “excessive rapprochement” with Putin reverses, causing oil prices to rise, we believe favorable global conditions can prevent the EUR/USD from trending downwards.
On the economic front, according to the economic calendar, eurozone inflation data is due midweek and is expected to show that inflation is within the European Central Bank’s 2.0% target, although it would take a smaller-than-expected surprise to convince the market that the ECB will make further interest rate cuts going forward.
However, the surprise factor is fading, as all major European countries will have released their domestic data, meaning the eurozone-wide figure will already be expected. The surprise factor is likely to emerge in the August PMI survey, due next Thursday. The July PMI surprised markets with its rise, revealing the economy’s return to growth, boosting euro trading. A repeat performance could help it rise again.
Jackson Hole Symposium to Strongly Influence Dollar Trading
However, the US dollar side is the most important factor for the EUR/USD relationship. All eyes are on Jackson Hole, Wyoming, on Friday, where Federal Reserve Chair Jerome Powell will speak. He is expected to confirm market expectations of a 25 basis point rate hike given the slowdown in US labor markets. However, he will likely dismiss hopes of a 50-basis point hike given that inflation remains elevated.
As is well known, Jackson Hole has a long history of significance for markets, as the Federal Reserve Chairman has consistently used his speech to signal shifts in monetary policy. At last year’s Jackson Hole Economic Symposium, Fed Chairman Powell sent a clear signal that it was time to begin cutting interest rates, followed by a larger 50 basis point cut at the FOMC meeting in September.
Last year, Powell said, “The time has come to adjust policy. The direction is clear,” with inflation remaining on a “sustainable path” toward its target.
At this month’s Jackson Hole Symposium, market participants will be listening closely to see if Chair Powell will endorse the pricing for a resumption of rate cuts next month. The risk is that Chair Powell refrains from giving a clear signal on the timing of the next rate cut, giving the Fed more time to continue assessing incoming data before the September FOMC meeting. Obviously, this could help to alleviate the downward pressure on the US dollar in the short term. However, analysts at ING Bank believe the speech will lean toward being cautious on the US dollar.
Trading Advice:
Traders are advised to avoid trading EUR/USD for now until the outcomes of the Russian-Ukrainian conflict-resolution meetings are clear, as these have the strongest impact on the euro’s trajectory against other major currencies.
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