Following Jerome Powell’s speech at the Jackson Hole Symposium, the Federal Reserve’s reliance on information has sent ripples through the market. The recent dip in US JOLTs Openings to a two-and-a-half-year low has acted as a catalyst, setting off a flurry of reactions that speak of shifting dynamics in the labour landscape. The upcoming September meeting might be holding its ground, but all eyes are fixated on the November decision, where the odds of a pause stand balanced on a knife’s edge.
The European Central Bank’s stance remains uncertain, causing volatility in the EURUSD currency pair. However, a reduction in labour demand, as indicated in the US JOLTs openings falling from 9.165M to 8.827M, has caused a selloff in the greenback, with US yields falling to the benefit of the currency pair. With Eurozone and US inflation data and a Non-Farm Payroll report due this week, additional directional price action moves could occur as we advance.
Technical
On the 1D chart, the mid-July uptrend peaked, where a selloff formed a new downtrend. After finding support at 1.0789, the recent surge broke the downtrend in a bullish run toward the 61.8% Fibonacci golden ratio of 1.0894, where it now faces resistance.
A breakthrough at this resistance could see the currency pair testing the 100-SMA at 1.0925 before attempting a leg above the 50-SMA at 1.0971 to trigger a potential bullish trend reversal. In this case, the upward momentum could result in a test of resistance at 1.0995 and 1.1062 in the longer term.
However, if the bullish momentum fades at 1.0894, the price action could retest the breakout point of the uptrend around 1.0856 and 1.0789. Neckline support is established at 1.0738 in the case of a sustained downside.
Summary
The EURUSD benefitted from a sluggish labour report from the US that drove the greenback down. As we advance, multiple crucial data releases could drive the price action, with resistance at 1.0894 acting as a critical level for the forward-looking trend.
Sources: Koyfin, Tradingview
