Overview of the EUR/USD pair. August 21st. The Jackson Hole Symposium will be held through the prism of inflation
August 21, 2023 7:23 am
The EUR/USD currency pair stagnates around the Murray level of “2/8” (1.0864). Volatility over the past week has been low, only exceeding 63 points on Monday. As a result, it is currently quite difficult and inconvenient to trade the pair. On shorter timeframes, intra-day movements are such that it’s hard to expect a profit of more than 20 points from a single trade. On a 4-hour timeframe, one would need to hold a position for several days to aim for profits around 50–60 points, and even then, only if the pair moves in a single direction over those days, which is not always the case. Therefore, we once again note the well-known fact: if there is no volatility, it doesn’t matter which direction the price moves.
What are the prospects for the European currency? They have stayed the same over the last week. We still believe that the only way for the euro is to go down. We do not see fundamental or macroeconomic reasons for the resumption of a global upward trend, so logically, the dollar should continue to regain the positions it has lost over the past 11 months. However, as we have mentioned before, if a downward trend is emerging, it does not mean the pair will plummet daily. We are clearly in a period of stagnation, so we shouldn’t expect significant moves.
The macroeconomic background right now is a separate topic. Many statistics were published in the EU last week, but they were all rather bland. There will be no more of it this week, and its significance will be low again. The market’s attention is shifting to the Jackson Hole symposium, from which many have already managed to “make a mountain out of a molehill.”
Don’t expect too much from Jackson Hole.
It should be noted that the Jackson Hole symposium will only start on Friday. That means it will not impact currency pair movements for most of this week. Furthermore, the symposium is just an economic conference. Central bank heads will undoubtedly discuss the economic challenges the world has faced recently, with a lot of attention devoted to inflation and interest rates. However, it is unlikely that Lagarde, Powell, Bailey, and other “heads” are waiting for this symposium to coordinate their actions. Each central bank has its own economic conditions, data, and inflation level. Therefore, we believe the symposium will be a conference during which the chairs will assess monetary policy and inflation prospects, but nothing more.
It should be understood that central bank chiefs speak quite often, and what prevents them from making bold statements during their regular appearances? The point is that central bank leaders very rarely make such statements because monetary policy is like the Titanic in the Atlantic Ocean. There are no sharp turns or pivots here, nor can there be any. Therefore, if the Federal Reserve is considering further monetary policy tightening, it will take several months for the regulator to abandon this idea based on several inflation reports, which ideally should continue to indicate a slowdown in consumer price growth. The same applies to the ECB and the Bank of England. Therefore, most of this week, we expect news or fundamental events to be private. Certainly, a significant upheaval is possible on Friday, but it will largely hinge on the transparency of Lagarde and Powell’s remarks.
The average volatility of the EUR/USD currency pair over the last five trading days as of August 19 is 63 points and is characterized as “average.” Thus, we expect the pair to move between levels 1.0807 and 1.0935 on Monday. An upward turnaround of the Heiken Ashi indicator will indicate a new wave of upward correction.
Nearest support levels:
S1 – 1.0864
S2 – 1.0803
S3 – 1.0742
Nearest resistance levels:
R1 – 1.0925
R2 – 1.0986
R3 – 1.1047
Trading recommendations:
The EUR/USD pair is currently in a downward trend. Short positions can be maintained with targets at 1.0807 and 1.0803 until the Heiken Ashi indicator turns upward. Long positions can be considered if the price consolidates above the moving average with a target of 1.0986.
Explanations for the illustrations:
Linear regression channels – help to identify the current trend. If both point in the same direction, the trend is strong now.
Moving average line (settings 20.0, smoothed) – determines the short-term tendency and direction in which trading should be conducted.
Murray levels – target levels for movements and corrections.
Volatility levels (red lines) – the likely price channel the pair will spend the next day based on current volatility indicators.
CCI indicator – its entry into the oversold area (below -250) or the overbought area (above +250) indicates that a trend reversal in the opposite direction is approaching.
The material has been provided by InstaForex Company – www.instaforex.com
The EUR/USD currency pair stagnates around the Murray level of “2/8” (1.0864). Volatility over the past week has been low, only exceeding 63 points on Monday. As a result, it is currently quite difficult and inconvenient to trade the pair. On shorter timeframes, intra-day movements are such that it’s hard to expect a profit of more than 20 points from a single trade. On a 4-hour timeframe, one would need to hold a position for several days to aim for profits around 50–60 points, and even then, only if the pair moves in a single direction over those days, which is not always the case. Therefore, we once again note the well-known fact: if there is no volatility, it doesn’t matter which direction the price moves.
What are the prospects for the European currency? They have stayed the same over the last week. We still believe that the only way for the euro is to go down. We do not see fundamental or macroeconomic reasons for the resumption of a global upward trend, so logically, the dollar should continue to regain the positions it has lost over the past 11 months. However, as we have mentioned before, if a downward trend is emerging, it does not mean the pair will plummet daily. We are clearly in a period of stagnation, so we shouldn’t expect significant moves.
The macroeconomic background right now is a separate topic. Many statistics were published in the EU last week, but they were all rather bland. There will be no more of it this week, and its significance will be low again. The market’s attention is shifting to the Jackson Hole symposium, from which many have already managed to “make a mountain out of a molehill.”
Don’t expect too much from Jackson Hole.
It should be noted that the Jackson Hole symposium will only start on Friday. That means it will not impact currency pair movements for most of this week. Furthermore, the symposium is just an economic conference. Central bank heads will undoubtedly discuss the economic challenges the world has faced recently, with a lot of attention devoted to inflation and interest rates. However, it is unlikely that Lagarde, Powell, Bailey, and other “heads” are waiting for this symposium to coordinate their actions. Each central bank has its own economic conditions, data, and inflation level. Therefore, we believe the symposium will be a conference during which the chairs will assess monetary policy and inflation prospects, but nothing more.
It should be understood that central bank chiefs speak quite often, and what prevents them from making bold statements during their regular appearances? The point is that central bank leaders very rarely make such statements because monetary policy is like the Titanic in the Atlantic Ocean. There are no sharp turns or pivots here, nor can there be any. Therefore, if the Federal Reserve is considering further monetary policy tightening, it will take several months for the regulator to abandon this idea based on several inflation reports, which ideally should continue to indicate a slowdown in consumer price growth. The same applies to the ECB and the Bank of England. Therefore, most of this week, we expect news or fundamental events to be private. Certainly, a significant upheaval is possible on Friday, but it will largely hinge on the transparency of Lagarde and Powell’s remarks.
The average volatility of the EUR/USD currency pair over the last five trading days as of August 19 is 63 points and is characterized as “average.” Thus, we expect the pair to move between levels 1.0807 and 1.0935 on Monday. An upward turnaround of the Heiken Ashi indicator will indicate a new wave of upward correction.
Nearest support levels:
S1 – 1.0864
S2 – 1.0803
S3 – 1.0742
Nearest resistance levels:
R1 – 1.0925
R2 – 1.0986
R3 – 1.1047
Trading recommendations:
The EUR/USD pair is currently in a downward trend. Short positions can be maintained with targets at 1.0807 and 1.0803 until the Heiken Ashi indicator turns upward. Long positions can be considered if the price consolidates above the moving average with a target of 1.0986.
Explanations for the illustrations:
Linear regression channels – help to identify the current trend. If both point in the same direction, the trend is strong now.
Moving average line (settings 20.0, smoothed) – determines the short-term tendency and direction in which trading should be conducted.
Murray levels – target levels for movements and corrections.
Volatility levels (red lines) – the likely price channel the pair will spend the next day based on current volatility indicators.
CCI indicator – its entry into the oversold area (below -250) or the overbought area (above +250) indicates that a trend reversal in the opposite direction is approaching.
The material has been provided by InstaForex Company – www.instaforex.com
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