EUR/USD:
The remarks made by Federal Reserve Chair Jerome Powell at the Jackson Hole symposium are considered hawkish. To some extent, this is true, as he emphasized the Fed's fight against inflation, suggesting that interest rates would continue to rise, even at the expense of the economy. Investors have factored in a 63.9% likelihood of a rate hike at the November meeting.
But there are several circumstances at play here that are not conducive to the dollar's relentless rise, or rather, relentless buying:
- US government bond yields displayed below-average volatility,
- By this morning, investors have reduced the chances of a November rate hike to 44.5%, which is 0.5% even below the figure from a week earlier,
- Powell essentially reiterated well-known stances, albeit in different words, referring the audience back to his own speech at Jackson Hole in '22,
- The dollar itself showed low volatility on Friday. The volume of Friday's trading was above average but not high, almost equivalent to what it was on August 23 - when EU and US PMIs were released
- Markets didn't react to European Central Bank President Christine Lagarde's speech at Jackson Hole, and the media even overlooked it. Lagarde emphasized the ECB's primary focus on inflation and highlighted the resilience of the German economy.
It seems that the media reacted more sensitively to the symposium.
The euro spent Friday within the target range of 1.0774-1.0834. On the daily chart, the Marlin oscillator remains sideways. The situation is in a classic technical form: settling above the resistance level of 1.0834 will help the price overcome the next level of 1.0865 with an attempt to correct higher to 1.0931 – to the MACD line on the daily chart, while settling below the support level of 1.0774 opens the next target at 1.0692. In general, the price is moving towards the intersection of the Fibonacci ray and the embedded price channel line in the green color around the target level of 1.0483.
On the four-hour chart, the resistance at 1.0834 is reinforced by the MACD line, so consolidating above it could take the price to 1.0931. The signal line of the Marlin oscillator is trying to turn upwards into the positive territory.
