The euro rally has taken a pause in the Wednesday session., Currently, EUR/USD is trading at 1.1736, up 0.03% on the day.
All eyes on Powell speech at Jackson Hole
With markets in a holding pattern ahead of the Jackson Hole meeting, which starts on Thursday, the euro could continue to drift. The lack of activity is likely to change on Friday, when Fed Chair Jerome Powell delivers a highly-anticipated speech. The question on the minds of investors is whether Powell will provide any details or hints as to the timing of a Fed taper. Risk sentiment has improved with the Biden Administration making progress on its budget and infrastructure proposals, but the mood could quickly shift, depending on what Powell says or doesn’t say. If he hints that a taper is imminent, that would likely give the dollar a boost. If, however, Powell chooses to lay low and doesn’t provide any news about a taper, risk sentiment could improve and send the dollar downwards.
German business sentiment remains high, but there are concerns as the Ifo Business Climate index worsened for a second straight month. In August, the index fell to 99.4, down from 100.7 (exp. 100.3). The well-respected survey found that businesses expressed worries about supply bottlenecks and the resurgence of Covid-19 Delta variant. Supply problems were also reflected in Germany’s PMI Manufacturing report for July, which was the lowest in six months. The unleashing of pent-up demand has led to a shortage in materials, which has had a negative effect on factory production. The severe shortage of auto chips has had a detrimental effect on German car production, with auto production expected to be “significantly below expectations”, according to the German auto industry association.
- Support and resistance levels have remained unchanged this week
- There are resistance lines at 1.1779 and 1.1859
- On the downside, we find support lines at 1.1642 and 1.1585
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