Chart of the Day: EURUSD
It’s the annual Federal Reserve Economic Symposium in Jackson Hole, Wyoming, that should garner all the attention this week. The event itself starts Thursday and finishes Saturday (AEST), with investors awaiting new information on the outlook for the US and the global economy, as well as the urgency for the Fed and other central banks to ease policy. Perhaps this is a perfect time for central banks to reset market expectations.
There’s been no improvement in geopolitical tensions since US President Donald Trump postponed the additional 10% tariffs on US$300bil worth of Chinese exports until later this year. The USD has had a run of form against the majority of G10 currency pairs.
We've seen the EUR close lower in five of the past six trading sessions. No surprises there, with weak EU economic data and Italian politics flaring up again. The German finance minister said on Sunday that Berlin could make up to €50 billion of extra fiscal funding in case of a slowdown, as the economy is clearly fragile and fiscal stimulus might be the best way out of the recession. German PMIs are due for release Thursday, with the consensus expecting the index to print 43.0 — the lowest since Markit started making the index. Softer-than-expected numbers will just add more pressure on the EUR.
The most recent drawdown simply subtracts from confidence to hold EUR longs, with the 1.1025 pin bar reversal the support level ahead of this week's data. A break below will most certainly attract more sellers, sending the pair into 1.1100.
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