EUR/USD Price Analysis – Aug 24, 2023

Daily Price Outlook

The EUR/USD currency pair failed to maintain its recent upward trend and dipped back to around 1.0850 on Thursday. However, the reason for its downward trend can be attributed to the decline in business confidence to 96 in France during August, which added to the Euro's challenges and contributed to the EUR/USD pair declines.

Furthermore, the broad-based US dollar regained its strength, which was seen as another key factor that kept the EUR/USD pair lower. Looking forward, the market's attention is now focused on today's data releases, especially Initial Jobless Claims and Durable Goods Orders, which are anticipated to impact currency movements.

US Dollar Stability and Focus on Jackson Hole Symposium:

As mentioned above, the US Dollar has managed to find some stability after stepping back from its recent peak, which saw it reach around 104.00 earlier this week. The USD Index (DXY) is currently hovering around the 103.50 level, showing that there is still some uncertainty in the US financial markets. Looking ahead, all eyes are on the start of the Jackson Hole Symposium.

Investors are anticipating Federal Reserve Chairman Jerome Powell's upcoming speech on Friday. However, there is a renewed debate about the Fed's commitment to sticking with a more cautious monetary policy for an extended period. This discussion has arisen due to the surprising strength of the US economy, even though there has been some softening in the job market and recent reports of lower inflation.

The EUR/USD pair may experience increased volatility as investors closely monitor developments. If Powell signals a shift in the Fed's monetary stance, it could strengthen the US dollar, potentially pushing the EUR/USD pair lower. However, any hints of continued caution from the Fed may support the euro, leading to a possible uptick in the pair's value.

ECB Divisions and Economic Data Impacting EUR/USD:

At the same time, there are disagreements within the European Central Bank (ECB) Council about whether to continue tightening measures beyond the summer. These internal divisions are causing worries about the strength of the Euro. On the economic data front, the eurozone had a relatively quiet period, with French Business Confidence dropping to 96 in August.

Meanwhile, in the US, investors are awaiting data on Initial Jobless Claims, the Chicago Fed National Activity Index, and July's Durable Goods Orders. These various factors collectively play a role in shaping the dynamics of the EUR/USD currency pair.

EUR/USD - Technical analysis

The EUR/USD currency pair is currently trading around the 1.0880 level, maintaining its position just below this level. Notably, the EMA50 intersects with this resistance, lending further reinforcement to its significance. Meanwhile, the stochastic indicator is displaying a clear loss of its positive momentum, signaling overbought conditions at present.

Given these circumstances, we are inclined to anticipate a bearish correction in the upcoming trading sessions, leading to a resumption of the prevailing bearish trend. It is noteworthy that our target for this movement is situated at 1.0785.

However, a breach of the 1.0880 level would negate the anticipated decline and potentially initiate a recovery, potentially resulting in further intraday gains. The projected trading range for today is positioned between the support level of 1.0770 and the resistance level of 1.0920.