EUR/USD analysis ahead of the Jackson Hole Symposium

The EUR/USD is in a consolidation phase ahead of key economic numbers and events from the US and Europe. The pair is firmly below 1.1800 and is about 4.80% below the highest level this month. 

ECB minutes 

European data published this week was relatively mixed. On Monday, preliminary data from Markit showed that the region’s manufacturing and services sectors continued doing well in August. Similarly, data from Germany revealed that the economy did well in the second quarter while business sentiment has declined slightly recently. 

On Thursday, the European Central Bank (ECB) will publish minutes of the recent minutes. In this meeting, the bank decided to leave interest rates and the quantitative easing policies unchanged. Therefore, in these minutes, analysts will be looking at whether the bank’s officials deliberated about tapering. 

Still, in a statement on Wednesday, ECB’s chief economists, William Lane, said that the bank will likely not deliberate on tapering in the September meeting. Therefore, the minutes will not have a major impact on the EUR/USD price.

Later on, the US will publish the second estimate of second-quarter GDP data and initial jobless claims numbers. Economists polled by Reuters expect the data to show that the American economy rose by 6.7% in Q2. This will be a better estimate than the first estimate of 6.5%. Analysts also expect numbers to show that initial jobless claims dropped last week.

The key driver for the EUR/USD in the near term will be a statement by Jerome Powell at the Jackson Hole Symposium. This statement will be notable since the Federal Reserve will not hold a meeting this month. The next meeting will be in the final week of September.

As such, Powell will provide his thoughts on the state of the American economy and whether the bank will consider tapering.

EUR/USD forecast

In an article on Wednesday, I noted that the US dollar index has formed a W pattern. Since the DXY has an inverse relationship with the EUR/USD, the latter has formed a M pattern. The pair is actually at the lower side of this pattern. It has also declined below the 25-dat and 50-day moving averages (MA). The MACD is below the neutral line.

Therefore, the EUR/USD pair will likely break out lower in the next few days. If this happens, the next key level to watch will be 1.1600.