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EUR/USD Testing Several Key Supports as Momentum Leans Toward Sept Pause

FOREX
  • The EUR faced selling pressure through Asia-Pac hours and across the European open, resulting in a break below the key 200-dma support of 1.0804 (last broken below in Jun'21). EUR/USD is now testing the base of the bull channel drawn off the March lows at 1.0769. A break and close below this mark would be a resolutely bearish development, opening June 12th lows at 1.0733 as well as the March 15 lows of 1.0635 further out.
  • Moves follow further caution around the Sept ECB rate decision, with Reuters reporting that momentum for a rate pause is building, according to 8 separate sources. Approximately 8.5bps of tightening remains priced, shedding around 1bps on the story.
  • This leaves EUR the poorest performing currency so far Friday, with with the USD modestly firmer. AUD is the strongest on the day, as markets look to recoup a small part of Thursday's sharper losses. The outlook for AUD/USD remains bearish, with focus on the bear trigger and mid-August lows of 0.6365. China stimulus efforts may be containing AUD risks at present, with Reuters citing sources in reporting that the China authorities are looking to cut stamp duty on domestic stock trading by as much as 50%.
  • Jackson Hole takes focus going forward, with Fed chair Powell's keynote speech in the spotlight. He speaks at 1505BST/1005ET, with text set to be released. Final University of Michigan sentiment data also crosses, with 1-yr and 5-yr inflation expectations expected unchanged at 3.3% and 2.9% respectively.
MNI London Bureau | +44 203-865-3809 | edward.hardy@marketnews.com
Energy BulletsCommodities
MNI London Bureau | +44 203-865-3809 | edward.hardy@marketnews.com
Energy BulletsCommodities

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