With the greenback ticking up to two-month highs against its major counterparts, all eyes are on the EURUSD currency pair in the Friday session, with Jerome Powell and Christine Lagarde taking the stand. The greenback has dominated recent sessions as risk aversion took over. Still, with potential divergence in the monetary outlook of the Eurozone, risks remain in the currency pair as we head to the weekly close. 

The market widely expects Powell to retain his hawkish outlook of keeping rates higher for longer, especially considering the recent strength of US economic data. However, even without a dovish outlook, the greenback could be at risk of easing if Powell opts for a less hawkish stance than the market expects. Later in the day, ECB president Lagarde will give the market further indications of the Eurozone’s economic standpoint, rounding off a trading session that will have traders on the edge of their seats.  

Technical 

On the 1D chart, a prior cup and handle breakout reached its peak, resulting in a newly formed downtrend as the greenback exerted its dominance against the Euro. However, with the RSI pointing toward potentially oversold conditions, a reversal remains on the cards in the Friday session. 

With volumes subsiding, the currency pair could continue its descent below 1.0780 (S1) and 1.0764 within the channel. If the Euro fails to exert strength against the greenback following the Jackson Hole, the downside could reach 1.0683. 

However, if volumes tick up on a stronger Euro or weaker greenback, a push above the 1.0830 pivot could trigger a reversal to break through the dynamic channel resistance. From the mid-July peak, a retest of the Fibonacci golden ratio and midpoint at 1.0894 and 1.0959, respectively, could lead the currency pair to the 50-day SMA. Another leg higher could signal a longer-term trend reversal toward 1.1024.  

Summary 

With the greenback at two-month highs, all eyes are on Jerome Powell ahead of his speech at the Jackson Hole Symposium. If he maintains a hawkish stance of keeping rates higher for longer, the EURUSD currency pair could trickle lower toward 1.0683. 

Sources: Koyfin, Tradingview