EUR/USD Rates Might Surge Heading Into Jackson Hole Symposium

EUR/USD, AVERAGE INFLATION, JACKSON HOLE, FEDERAL RESERVE – KEY POINTS

• The EUR/USD rates seem likely to surge as the price models out the Bullish Flat at immediate resistance.
• The upcoming symposium might dictate the short term forecast for the haven linked US Dollar
• Risk demand considerably improved in the Asia-Pacific trade with vaccine optimism and the cooling geopolitical tensions

ASIA PACIFIC TRADE

The broader risk on tilt has been seen across the Asia Pacific trade with the COVID-19 optimism and the cooling Sino-US trade tensions sustained equity markets.

The Australian ASX 200 index rose 0.52% along with the S&P 500 futures with the haven linked Japanese Yen and US Dollar losing ground against their major peers.

Crude oil pushed high along the commodity-sensitive Aussie Dollar, while the EUR/USD rates bouncing back over 1.18.

A closer look ahead, the United States home sales for July instead of the light economic element with the traders now focusing on Jerome Powell, the Federal Reserve Chairman’s speech today at Jackson Hole Symposium.

EUR/USD AHEAD JACKSON HOLE SYMPOSIUM

On Thursday, Everything seems to be pointing towards the Jackson Hole Symposium where the feds chair is expected to deliver a speech.

Jerome Powell’s awaited speech is highly expected to shed some idea into the concept of average inflation targeting that has been proposed by different FOMC (Federal Open Market Committee) members who includes the Minneapolis Fed Chair Neel Kashkari, who still holds onto the belief that the federal reserve must do its work and allow inflection to rise modestly over 2% before it rolls back the current stimulus measures.

With lawmakers not wanting to be involved with the issues regarding the most likely path of the new target range for the available funds at the FOMC fiscal policy meeting last month. However, the lack of reasonable guidance from Powell might substantially sour trader sentiment.

Nevertheless, this is not likely considering the federal reserves’ dedication to making use of their extensive range of resources to support the economy of the united states in these challenging times, thus promoting the maximum job rate and price stability aims.

So with the existing US jobless rate remaining over the peak that was seen back in 2008 worldwide financial crisis as well as the consumer price inflation that is still under 2%, it seems the monetary policy settings will be with us for a long time.

However, the US Dollar might create a near term pullback incase Jerome Powell’s speech further disappoints the market, possibly leading to a marked rebound in the EUR/USD exchange rates as DAX 30 Might Drop Amidst Rising Covid-19 Infections.

USA Core Inflation

Source – TradingEconomics

The EUR/USD exchange rate continues consolidating in the Bull Flag continued pattern just under the key psychological resistance trading at 1.19 handle.

The hidden bullish relative strength index divergence, along the sharp slopes of the 200-day and 50-day Moving average, shows that the path of resistance is much higher.