The EURUSD pair bounced back from dynamic support as the stock market’s rally continues. Ahead of the Jackson Hole Symposium later in the trading week, the pair consolidates looking for direction.
However, it trades with a bullish bias. Friday’s price action is relevant when it comes to the correlation with the stock market. While it dropped below 1.18 after exceeding 1.1960 early in the week, EURUSD found buyers into the 1.1750 level. The stock market’s bounce is credited with much of the USD weakness, seen on other currency pairs too.
Jackson Hole Symposium in Focus This Week
As it is accustomed, the Kansas Fed holds the Jackson Hole economic summit every summer. Just like the ECB does with the Sintra, Portugal, conference, this is an event where central bankers gather and comment on monetary policy developments around the world.
Only this time, the event is held online. Because of the pandemic, the Jackson Hole Symposium is a virtual event. Nevertheless, the USD is expected to move.
Market participants expect the Fed to give some clarifications regarding its monetary policy. The EURUSD retracement from 1.1950 area came after the FOMC Minutes last week showed that the Fed has no interest in Yield Curve Control (YCC) measures. However, it could opt to expand its average inflation targeting, or a combination of the two may be on the cards.
EURUSD Technical Picture
With no important economic release until the Jackson Hole Symposium begins, the EURUSD pair will likely trade with a bid tone until the event. Now that it recovered the 1.18 level, the consolidation area becomes even more evident.
More precisely, for the entire month of August, the EURUSD pair did nothing but consolidate – just like the stock market did. Bulls would want to see a break higher, and buying further strength above 1.1960 means that the possible bullish flag formation broke higher. It points to 1.24, while 1.18 must hold.
On the other side, a move lower below 1.1750 should generate selling pressure. With a stop loss at the highs, bears may target 1.1450.
EURUSD Price Forecast