- In the last trading session of last week, the EUR/USD currency pair rebounded strongly with gains extending to the resistance level of 1.1029, its highest in seven months, recovering from Thursday's losses which reached 1.0949.
- The currency pair's gains came as declining inflation, strong retail sales, and a decline in US jobless claims helped ease fears of a potential recession.
- Furthermore, investor sentiment was boosted by signals from Federal Reserve officials pointing to a possible interest rate cut in September.
According to reliable trading platforms, financial markets continued to evaluate the latest economic data for hints about the US Federal Reserve’s expectations. A batch of upbeat US economic data had markets favoring a 25-basis point rate cut by the US central bank rather than a sharp 50 basis point cut in September. Nevertheless, bets that inflation is converging towards the Fed’s target have allowed markets to favor expectations that the Federal Open Market Committee (FOMC) will deliver 100 basis points of cuts in its remaining three meetings this year.
According to the economic calendar results, US retail sales advanced more than expected in July and initial jobless claims unexpectedly fell to a one-month low. Meanwhile, the University of Michigan’s US consumer confidence index beat estimates.
About what’s influencing the forex market this week, all eyes will be on the mountains of Wyoming this week for the US Federal Reserve’s Jackson Hole Symposium, your best chance each year to see a Nobel Prize-winning economist don a cowboy hat. The highlight will come on Friday, when Fed Chairman Jerome Powell speaks about the economic outlook in a keynote address at 10 a.m. New York time.
With the US central bank approaching a crucial pivot point, it is difficult to overstate how much attention financial markets will pay. First, they are looking for confirmation that the Fed will cut US interest rates in September. However, more drama surrounds what happens next and the pace of additional cuts over the next few months as the Fed faces dual risks to both inflation and employment.
Conversely, with widespread expectations that the European Central Bank will resume cutting interest rates in September, all eyes will be on data on negotiated wages and the decision of policymakers in July. Preliminary Purchasing Managers' Indices for Germany, France, and the Eurozone are also scheduled to be released that day, as economists expect readings similar to those recorded last month.
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EUR/USD Technical analysis and forecast:
As we mentioned before, based on the daily chart, EUR/USD stability above the psychological resistance of 1.1000 will continue to encourage bulls to advance further higher. Furthermore, technical indicators will move towards overbought levels in that time frame if the currency pair moves towards the resistance levels of 1.1075 and 1.1130 respectively. Also, the EUR/USD gains will be on an important date with the hints of the heads of global central banks at the Jackson Hole symposium. On the other hand, and in the same time frame, the EUR/USD price will move below the support level of 1.0875, which will be important for the bears to control the trend again.
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