EURUSD: more rate hikes?
FOMC minutes from July`s meeting were published during the previous week and revealed a few things that the market was not ready to hear at this moment. Namely, several FOMC members were concerned that the current tight job market might support higher spending and further push the inflation to higher grounds. This means higher probability that rates could be increased to the higher levels from currently expected. On the other hand, there is also FOMC concern that problems which commercial real estate is currently facing, might have negative consequences on some banks and financial institutions. Equity market had a strong negative reaction to this news, while US yields surged further, as well as USD. Released figures during the previous week for the US Retail Sales showed an increase by 0.7% in July, above market expectations of 0.4%. Building permits in July amounted to 1.442M, slightly lower from market estimate of 1.463M.
GDP growth for Q2 in the Euro Area was 0.3% q/q and 0.6% on a yearly basis, which was in line with market estimates. Inflation rate in the EU was standing at a level of 5.5% in July same as the month before, while on a monthly basis it dropped by 0.1%. The ZEW Economic Sentiment Index for the Euro Area jumped to the level of -5.5 in August from -12.2 posted for the previous month. The same indicator for Germany was better from market expectations of -14.7, with a result of -12.3 in August.
The EURUSD pair traded with a clear downtrend during the whole week. The currency pair started the week around level of 1.095 and finished the week at level of 1.087. RSI is moving around level of 36, however, it is still not in the clear oversold territory. Moving averages of 50 and 200 days continue to move as two parallel lines with the uptrend, without an indication that the potential cross might occur anytime soon.
During the previous week USD was strongly supported by the FOMC meeting minutes which revealed a potential for even higher interest rates in the future period from currently estimated, ending the week above 1.08 level. In this sense, EURUSD might start week ahead by testing the 1.08 support line, however, at this moment there is no indication on charts that the price might go lower from this level. RSI is pointing that soon might come a period of a short reversal, in which sense, the currency pair might revert a bit to the upside to test 1.09 and 1.10 short term resistance. There is no indication that the higher levels from these might be reached in the week ahead. It should be kept in mind that the Jackson Hole Symposium and Fed Chair Powell speech are scheduled for the week ahead, which might imply some higher market volatility.
Important news to watch during the week ahead are:
Euro: HCOB Manufacturing PMI Flash for August for Germany, GDP Growth Rate for Germany, Ifo Business Climate for Germany, ECB President Lagarde Speech.
USD: Jackson Hole Symposium, Durable Goods Orders for July, Michigan Consumer Sentiment Final for August. Fed Chair Powell Speech
GDP growth for Q2 in the Euro Area was 0.3% q/q and 0.6% on a yearly basis, which was in line with market estimates. Inflation rate in the EU was standing at a level of 5.5% in July same as the month before, while on a monthly basis it dropped by 0.1%. The ZEW Economic Sentiment Index for the Euro Area jumped to the level of -5.5 in August from -12.2 posted for the previous month. The same indicator for Germany was better from market expectations of -14.7, with a result of -12.3 in August.
The EURUSD pair traded with a clear downtrend during the whole week. The currency pair started the week around level of 1.095 and finished the week at level of 1.087. RSI is moving around level of 36, however, it is still not in the clear oversold territory. Moving averages of 50 and 200 days continue to move as two parallel lines with the uptrend, without an indication that the potential cross might occur anytime soon.
During the previous week USD was strongly supported by the FOMC meeting minutes which revealed a potential for even higher interest rates in the future period from currently estimated, ending the week above 1.08 level. In this sense, EURUSD might start week ahead by testing the 1.08 support line, however, at this moment there is no indication on charts that the price might go lower from this level. RSI is pointing that soon might come a period of a short reversal, in which sense, the currency pair might revert a bit to the upside to test 1.09 and 1.10 short term resistance. There is no indication that the higher levels from these might be reached in the week ahead. It should be kept in mind that the Jackson Hole Symposium and Fed Chair Powell speech are scheduled for the week ahead, which might imply some higher market volatility.
Important news to watch during the week ahead are:
Euro: HCOB Manufacturing PMI Flash for August for Germany, GDP Growth Rate for Germany, Ifo Business Climate for Germany, ECB President Lagarde Speech.
USD: Jackson Hole Symposium, Durable Goods Orders for July, Michigan Consumer Sentiment Final for August. Fed Chair Powell Speech
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