The chart is created using TradingView
Euro price, news and analysis:
- A dramatic, if not surprising, decline EUR / USD below 1.17 last Thursday, it is likely to cause significant damage Euro against US dollar, although a respite around the current level seems likely at first glance.
- As the pair has already made new lows in 2021, the next obvious targets for bears were last seen in September and then again in November 2020 at 1.16.
The price of the euro is lower in the event of a sharper correction
The sharp decline in the euro last Thursday /USD below 1.17 was not surprising, but was still very significant and has laid the groundwork for further weakness, with a decline of around 1.16. However, it is likely that consolidation will take place both above and below first, and even a significant collision would leave the risk down.
Although technically the EUR / USD has not yet been significantly oversold, the pair’s decline to its 2021 low will certainly lead to a period of reflection before the next sharp step, but bears are already looking at the September 2020 low of just over 1.16 and the November 2020 low, 1, 1602, as obvious subsequent targets.
EUR / USD price chart, daily schedule (August 27, 2020 – August 19, 2021)
Source: IG (Click for larger image)
The main problem with this analysis is that the bear’s sentiment to the EUR / USD is now so widespread that any positive news about the euro or negative news about the dollar could lead to a rather short cover, giving the pair at least a temporary rise.
It is in this context that the Kansas City Fed Economic Policy Symposium in Jackson Hole, Wyoming, which begins this Thursday and ends on Saturday, is so important. Market participants are so convinced that the Federal Reserve effectively announces its financial decline in advance, so that there is enough room for disappointment.
For example, the Fed may decide not to say anything before the 21st – 22nd Federal Open Market Committee, which contains a summary of its economic forecasts. Probably? No. Possible? Yes.
Week ahead: PMI and Ifo
Coming to next week’s data, there are a number of figures that would normally be important, but less important due to the shadow of the Jackson Hole Symposium. On Monday, the purchasing managers’ indices for both the manufacturing and services sectors of the euro area economies will be followed by the Ifo index for the German business climate on Wednesday, GfK’s German consumer confidence on Thursday and French consumer confidence on Friday.
– Written by Martin Essex, analyst
Feel free to contact me on Twitter @MartinSEssex