EURO : Key Economic Event
(Thu, 27 Aug 2020).
- EUR/USD remains rangebound ahead of Jackson Hole Symposium
- RSI approaches overbought territory
Price action remains faithful to key Fibonacci support
EUR/USD: ALL EYES ON JACKSON HOLE
After recovering from March 2020 lows, bulls trading EUR/USD dominated the market, with an impressive nine week rally, until coming into a wall of resistance at the psychological level of 1.200 and the US Dollar was able to regain a portion of its recent losses. Although the FOMC minutes revealed that the Fed has no intention of tampering with rates in the near future, concerns surrounding the ballooning balance sheet and yield curve control remain. This draws our attention to the much anticipated Jackson Hole Economic Symposium, where Fed Chairman Jerome Powell will review the framework for monetary policy today at 13:10 GMT, which will likely set the tone for September.
Meanwhile, a resurgence of Covid-19 related cases in Europe, particularly in Spain, Italy and France, have once again confirmed that the pandemic is not yet over, diminishing hopes of a swift economic recovery.
PRICE ACTION STALLS AT KEY FIBONACCI SUPPORT
After four consecutive months of gains, the EUR/USD has stumbled into a key level of Fibonacci retracement, diminishing the hopes of a bullish continuation. From a technical standpoint, the weekly chart below highlights Fibonacci levels from two major moves. The first Fibonacci retracement (pink) represents the move between the April 2014 high and the January 2017 low, while the second Fibonacci (purple) represents the short-term move, plotted between the February 2018 high and the March 2020 low.
Currently, the 61.8% retracement level continues to hold strong at a level of 1.18244, in anticipation of today’s economic event. In addition to this, the Relative Strength Index (RSI), is hovering around 70, a possible indication that the pair may be approaching overbought territory.
EUR/USD FALLS BELOW 55- PERIOD MA
From a short-term view, the four-hour chart below highlights that the EUR/USD has fallen below the 55-period moving average (MA), another possible indication that the bulls are struggling to maintain control. The area of confluency formed by the 31.8% retracement of the long-term move (1.17307) and the 61.8% retracement level mentioned above, are holding strong as support, but a break below may provide confirmation that the trend may soon reverse.
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