Euro, EUR/USD, US Dollar, Fed, Jackson Hole, China, PBOC, HSI, Crude Oil, Gold – Talking Points
- Euro support has held so far but may falter if the US Dollar resumes strengthening
- China eased monetary policy today, but not by enough looking at the price response
- Markets are now eyeing the Fed’s Jackson Hole symposium. If they’re hawkish, will EUR/USD break lower?
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The Euro steadied to start the week as it pauses in its recent run lower on the back of the US Dollar regaining its ascendency this month. Most of the other major currency pairs have also had a slow Monday so far.
The Federal Reserve meeting minutes for the July gathering opened the door to a potential hike in the target rate going into the end of the year.
Later this week the Kansas City Fed will host its annual Jackson Hole Economic Symposium.
For the near term, the market will be looking for clues on the September Federal Open Market Committee (FOMC) rate decision.
The podium at this event also lends itself for notable adjustments in the bigger picture for the Fed. As a result, Fed Chair Jerome Powell’s speech will be closely watched by the market this Friday.
The People’s Bank of China (PBOC) eased monetary policy today by 15 basis points (bp) for the 1- and 5-year loan prime rate. They ended up moving the 1-rate by only 10 bp to 3.45% and kept the 5-year rate unchanged at 4.20%.
Earlier today the People’s Bank of China (PBOC) eases monetary policy, moving the 1-year loan prime rate by only 10 basis points to 3.45% and kept the 5-year rate unchanged at 4.20%. The market had been anticipating a 15 bp cut for both instruments.
Hong Kong’s Hang Seng Index (HSI) plunged on the news, trading more than 1.8% at one stage. Other APAC equity indices are generally, except for Japan, that saw modest gains.
Crude oil has found firming footing with the WTI futures contract is nearing US$ 82 bbl while the Brent contract is a touch above US$ 85 bbl. Spot gold remains below US$ 1,900 and has been oscillating around US$ 1,890 today.
Looking ahead, the US will see some existing home sales adata and a number of Fed speakers will be crossing the wires.
The full economic calendar can be viewed here.
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How to Trade EUR/USD
EUR/USD DAILY TECHNICAL ANALYSIS SNAPSHOT
EUR/USD remains below a descending trend line but has stalled in its bearish run just above a potential support zone in the 1.0830 – 1.0835 area where there are some breakpoints and prior lows.
Support could also be near the 78.6% Fibonacci Retracement levels at 1.0770 which is just above the 200-day simple moving averages (SMA).
Ahead of that level, some prior lows and the breakpoint in the 10830- 1.0835 area may provide support.
If EUR/USD was to rally and approach the descending trend line, there could be resistance at the 21- and 55-day SMAs just ahead of it.
Potential resistance might also be offered in the 1.1065 – 1.1095 area where several historical breakpoints reside along with a recent high and just ahead of the psychological level at 1.1100.
Further up, resistance could be at the breakpoint from the March 2022 high at 1.1185 or the recent peak at 1.1275, which coincides with two historical breakpoints.
Above those levels, resistance might be at the Fibonacci Extension of the move from 1.1095 to 1.0635 at 1.1380. Just above there are some more breakpoints in the 1.1385 – 95 area.
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— Written by Daniel McCarthy, Strategist for DailyFX.com
Please contact Daniel via @DanMcCarthyFX on Twitter