EUR/USD Current Price: 1.1823
- US Federal Reserve’s Powell introduced a monetary policy shift towards target average inflation.
- Wall Street was unable to hold on to early gains, but Treasury yields reached weekly highs.
- EUR/USD is neutral around 1.1820, could turn bearish below 1.1750.
The EUR/USD pair traded as high as 1.1901 and as low as 1.1761 but is ending the day in its around 1.1820. The sharp moves were triggered by US Federal Reserve chief Powell’s worlds, as he presented a new framework for monetary policy in his opening remarks in the Jackson Hole Symposium. As expected, Powell introduced a shift towards average target inflation, which means that policymakers could let inflation run beyond the usual 2%. Also, Powell focused on the employment situation. He highlighted a “broad-based and inclusive goal” of maximum employment. By the end of his statement, Powell noted that it would take a couple of years for the employment sector to recover, which alongside the new view on inflation, pretty much signifies lower rates for longer.
Stocks soared but trimmed part of their gains ahead of the close, while Treasury yields reached fresh weekly highs with the events, although currency majors saw little changes after the dust settled. The US also reported the second estimate of its Q2 GDP revised to -31.7%, and Initial Jobless Claims for the week ended August 21, which resulted at 1.006 million, slightly worse than expected.
In terms of data, Friday will be quite a busy day, as Germany will publish the September GFK Consumer Confidence Survey, while the EU will release August Consumer Confidence and the Economic Sentiment Indicator. As for the US, the country will unveil spending and income data for July and the final reading of the August Michigan Consumer Sentiment Index.
EUR/USD short-term technical outlook
The EUR/USD pair has held inside last Friday’s range for a fourth consecutive day, finishing it little changed on the downside. The short-term picture is neutral, as the pair has spent most of the day hovering around converging 20 and 100 SMA, both directionless, now trading a few pips below them. Technical indicators, in the meantime, fell below their midlines before turning flat, losing their directional strength. The short-term picture is neutral, although, in the longer run, the risk keeps skewing towards the downside.
Support levels: 1.1750 1.1710 1.1665
Resistance levels: 1.1840 1.1885 1.1920