Bullish view
Buy the EUR/USD pair and set a take-profit at 1.1750.
Add a stop-loss at 1.1600.
Timeline: 1-2 days.
Bearish view
Sell the EUR/USD pair and set a take-profit at 1.1600.
Add a stop-loss at 1.1750.
The EUR/USD exchange rate pulled back to 1.1650 on Thursday, a few pips below this month’s high of 1.1710. It retreated after the latest US GDP and PCE numbers and as traders waited for the upcoming statement by Jerome Powell at the Jackson Hole Symposium.
Jackson Hole Summit Ahead
The EUR/USD pair pulled back as investors reacted to the latest US GDP and PCE reports. A report showed that the core PCE rose 3.3% in July, while the headline figure rose 3.7% during the month. These numbers have remained above the 2% target in the past five years.
Still, there is a likelihood that inflation will remain under pressure in the foreseeable future. For one, while Brent and the West Texas Intermediate (WTI) have dropped this week, gasoline and diesel prices have remained at an elevated level. The average gasoline price remains above $4, while diesel prices are nearing their all-time high.
Therefore, traders will be focusing on the upcoming statement by Kevin Warsh, the Fed Chair, at the Jackson Hole Symposium in Wyoming. His statement comes at an important time, with inflation remaining above the 2% target. It also comes as cracks in the bond market emerges, with the 30-year yield hovering at its highest level in two decades. The surge pushed the Treasury Department to intervene last week.
Market participants are still divided on what to expect from the Fed this year, with some believing that it will need to hike. Others expect it to leave interest rates unchanged for the remainder of the year.
Europe is also facing the same inflation challenges. Diesel prices are rising in the continent, while the price of natural gas has jumped to the highest level since 2023. Therefore, with inflation remaining above the ECB’s 2% target, market participants are predicting that the bank will hike rates this year.
EUR/USD Technical Analysis
The EUR/USD pair has wavered in the past few days as traders waited for Warsh’s statement at the Jackson Hole Symposium. It pulled back from a high of 1.1710 to a low of 1.1650. This retreat happened after it formed two shooting star candles.
The pair remains slightly above the crucial support level of 1.1620, its highest point on June 16 this year. It has also formed a bullish flag pattern, a continuation sign in technical analysis.
Therefore, the pair will likely have a bullish breakout, potentially to the key resistance level of 1.1710, its highest point this month. A move above that level will point to more gains, potentially to 1.1800.
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