EURUSD has broken below the key 1.16 support ahead of the Jackson Hole Symposium, raising the stakes for both bulls and bears as markets become more aware of the likelihood of a hawkish stance.
But will it be the case?
Let's see what the possible scenarios are at play.
Bearish Catalysts:
Hawkish Fed Signals: Recent FOMC minutes and a potential hawkish tone from Chair Powell could push EURUSD lower. Rate cut odds for December have dropped sharply, and further Fed focus on inflation may accelerate downside.
Technical Breakdown: The loss of 1.16 opens the door to 1.1530, 1.1460, and possibly 1.14. No clear bullish divergence on RSI suggests more downside risk.
Geopolitical Risks: Uncertainty around the Ukraine ceasefire could weigh further on the euro.
Bullish Catalysts:
Oversold Conditions: EURUSD is approaching oversold territory, with a potential double bottom forming near 1.1530/1.1460.
Dovish Surprise: If Powell signals concerns over the labour market or hints at a pause, a short-covering rally could target 1.16 and above.
ECB Commentary: Any unexpected hawkishness from ECB President Lagarde could support the euro.
Key Levels to Watch:
Support: 1.1530, 1.1460, 1.1400
Resistance: 1.1600, 1.1660
Trading Plan:
Volatility is likely post-symposium. Bears may look for breakdowns and rallies to resistance for entries, while bulls might watch for reversal signals at key supports if the Fed surprises dovishly.
This content is not directed to residents of the EU or UK. Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice. ThinkMarkets will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information.
But will it be the case?
Let's see what the possible scenarios are at play.
Bearish Catalysts:
Hawkish Fed Signals: Recent FOMC minutes and a potential hawkish tone from Chair Powell could push EURUSD lower. Rate cut odds for December have dropped sharply, and further Fed focus on inflation may accelerate downside.
Technical Breakdown: The loss of 1.16 opens the door to 1.1530, 1.1460, and possibly 1.14. No clear bullish divergence on RSI suggests more downside risk.
Geopolitical Risks: Uncertainty around the Ukraine ceasefire could weigh further on the euro.
Bullish Catalysts:
Oversold Conditions: EURUSD is approaching oversold territory, with a potential double bottom forming near 1.1530/1.1460.
Dovish Surprise: If Powell signals concerns over the labour market or hints at a pause, a short-covering rally could target 1.16 and above.
ECB Commentary: Any unexpected hawkishness from ECB President Lagarde could support the euro.
Key Levels to Watch:
Support: 1.1530, 1.1460, 1.1400
Resistance: 1.1600, 1.1660
Trading Plan:
Volatility is likely post-symposium. Bears may look for breakdowns and rallies to resistance for entries, while bulls might watch for reversal signals at key supports if the Fed surprises dovishly.
This content is not directed to residents of the EU or UK. Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice. ThinkMarkets will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information.
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The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.