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23/08/24
53
EUR/USD Holds Above 1.1100: Traders Await Powell’s Key Comments
The EUR/USD currency pair remains above the 1.1100 level after experiencing a pullback in the previous session, closing in the red on Thursday. The recent uptrend, which saw the pair increase by more than 1.5% over four trading days, appears to be losing momentum as market participants adopt a cautious stance ahead of important remarks from Federal Reserve Chairman Jerome Powell at the Jackson Hole Symposium.
Economic data released from the United States indicated that the private sector is still showing robust growth early in August, with the S&P Global Composite PMI flash estimate reported at 54.1. However, a significant drop in major Wall Street indices later that day contributed to the strength of the U.S. dollar, which limited the upward movement of the EUR/USD pair and pushed it into a corrective mode.
Powell’s address is scheduled for 14:00 GMT, and current market expectations, according to the CME FedWatch Tool, are fully aligned with a 25 basis points reduction in the Fed’s interest rate for September. Additionally, there is approximately a 25% chance that the Federal Reserve could consider a more substantial 50 basis points cut. The market reaction will depend heavily on whether Powell signals a shift away from potential large rate cuts or hints at continued easing policies for the rest of the year, which could impact how investors view the U.S. dollar.
From a technical perspective, the EUR/USD has been trading within the lower section of its ascending regression channel. The Relative Strength Index (RSI) is slightly below 60, indicating waning bullish momentum. Critical support is seen at the 1.1100 level, which, if breached and converted into resistance, could attract technical selling. Should the pair decline further, the 1.1060 to 1.1055 range and the psychological level of 1.1000 might offer additional support. On the upside, resistance could be observed at 1.1155, with 1.1200 marking the upper limit of the ascending channel.
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