USD remains weak as the Jackson Hole Symposium is about to start

The USD remained rather weak amidst low volatility yesterday and there seems to be a rather positive mood in the market as the Fed’s Jackson Hole symposium is about to start and investors are looking for clues regarding the Fed’s intentions to taper its QE program. The highlight of the Jackson Hole summit is expected to be Fed Chairman Powell’s speech, yet that is due tomorrow Friday in the American session. Overall, the market has turned more positive since FDA fully approved Pfizer’s Covid 19 vaccine at the beginning of the week, which may accelerate inoculations and full approval of the Moderna vaccine could follow within weeks. It should be noted that the US top health expert Dr. Anthony Fauci, stated that Covid 19 could be under control by spring next year boosting optimism. For today we also highlight the release of the US GDP 2nd estimate growth rate for Q2 as well as the weekly initial jobless claims figure.

The USD Index dropped yesterday amidst low volatility aiming for the 92.75 (S1) support line. Given the recent bearish tendencies and that the RSI indicator below our 4-hour chart is below the reading of 50 we tend to maintain our bearish outlook currently. Should the bears actually maintain control over the index’s direction, we may see the USD Index breaking the 92.75 (S1) support line and start aiming for the 92.30 (S2) support level. On the contrary should demand for the USD be displayed by the market, we may see the index reversing course and breaking the 93.20 (R1) line thus opening the way for the 93.65 (R2) resistance level.

EUR gains amid concerns for Germany

The common currency tended to gain against the USD, CHF and JPY, while remained rather stable against the sterling yesterday. The economic recovery of the Eurozone seems to have slowed down given that the preliminary PMI readings for August were lower than expected with special interest being placed on the German economy which is also considered the economic powerhouse of the area. The economic recovery of Germany seems to be threatened by supply shortages in products such as semiconductors and others. It’s characteristic that Germany’s business climate indicator dropped for August implying that its outlook for the next six months is deteriorating. Today we note the release of Germany’s consumer confidence for September as well as the France’s business climate for August, while also ECB’s meeting minutes are due out and should the document be characterized by a dovish mood, we may see the single currency weakening.

EUR/USD remained supported yesterday aiming for the 1.1785 (R1) resistance line. We tend to maintain a bias for a bullish movement for the pair, given that the RSI indicator below our 4-hour chart is above the reading of 50. Should the bulls actually maintain control over the pair we may see the pair breaking the 1.1785 (R1) resistance line and aim for the 1.1885 (R2) resistance level. Should a selling interest be displayed by the market, we may see EUR/USD reversing course, breaking the 1.1695 (S1) support line and start aiming for the 1.1605 (S2) support level. 

Other economic highlights today and the following Asian session:

Today in the European session, we get Germany’s GfK Consumer Sentiment for September as well as France’s Business Climate for August. In the American session, we highlight the release of the US GDP 2^nd estimate for Q2 and at the same time the weekly initial jobless claims figure. During tomorrow’s Asian session we get from Japan Tokyo’s CPI rates for August and from Australia the retail sales growth rate for July.  On the monetary front besides the Jackson Hole summit and the release of ECB’s account of monetary policy, we also note the planned speeches of ECB’s Schnabel and RBA’s Richards.

USD Index H4 Chart 

Support: 92.75 (S1), 92.30 (S2), 91.75 (S3)

Resistance: 93.20 (R1), 93.65 (R2), 94.15 (R3)

EUR/USD H4 Chart 

Support: 1.1695 (S1), 1.1605 (S2), 1.1505 (S3)

Resistance: 1.1785 (R1), 1.1885 (R2), 1.1990 (R3)

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