- ECB policymakers are drumming up support for higher interest rates.
- EUR/USD fell after Powell’s hawkish comments.
- US businesses and consumers might suffer amid rising interest rates.
Today’s EUR/USD forecast is bearish as markets continue reacting to the Jackson Hole meeting. Policymakers at the European Central Bank argued on Saturday in favor of a significant interest rate increase for the following month since inflation remained uncomfortably high.
-Are you interested in learning about the forex indicators? Click here for details-
Rates were increased by 50 basis points to zero by the ECB last month, and a similar or even more significant rise is now anticipated on September 8. This is partly due to the US Federal Reserve’s exceptional significant steps.
ECB board member Isabel Schnabel, president of the French Central Bank Francois Villeroy de Galhau, and governor of the Latvian central bank Martins Kazaks all advocated for substantial policy action during their speeches at the annual Jackson Hole Economic Symposium.
“Both the likelihood and the cost of current high inflation becoming entrenched in expectations are uncomfortably high,” Schnabel said. “In this environment, central banks need to act forcefully.”
The pair was more affected by Powell’s hawkish comments and had been pushing lower since the Jackson Hole meeting. In his Jackson Hole speech on Friday, Powell emphasized the need to intensify the fight against inflation and made it plain that there would not be a “shift” to a looser posture anytime soon.
The central bank will instead have to hike interest rates as high as required to bring inflation under control, which will cause some “pain” for American consumers and businesses.
EUR/USD key events today
There won’t be much to divert attention from the central bankers’ speeches at Jackson Hole apart from a speech from Philip R. Lane, a member of the Executive Board of the European Central Bank.
EUR/USD technical forecast: Up trending channel breakout
Looking at the 4-hour chart, we see the price trading below the 30-SMA after breaking out of an up trending channel. This channel formed in a downtrend, meaning bears might make a solid bearish leg after the breakout. The RSI also supports bearish momentum as it trades below 50.
–Are you interested in learning more about British Trade Platform Review? Check our detailed guide-
The price will likely retest the recently broken channel support at this stage before falling further with the next hurdle at the 0.99003 support level. This trend will remain bearish if the price keeps trading below the 30-SMA.
Looking to trade forex now? Invest at eToro!
75% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
Share
Saqib Iqbal
