EUR/USD
Following Federal Reserve Chairman Jerome Powell's speech at the Jackson Hole virtual conference, which was formally considered as dovish, buyers of the euro, finding no resistance, bought volumes above average. But these long deals could turn out to be wrong. Powell's statement about inflation growth has an obvious pattern by its nature, because now the main reason for unwinding inflation will not be the Fed rate, but that incredible liquidity poured into the free market in the form of subsidies and benefits during the coronavirus crisis, which Powell remained silent. We talked about this in Friday's review. The first inflation indicators will come out in a week, but we already have forecasts: the producer price index may add 0.3% in August, the consumer price index is expected to grow from 1.0% y/y to 1.2% y/y. Labor data will be released on Friday, with the unemployment rate expected to fall from 10.2% to 9.8%. We expect the euro to fall in the coming days.
The daily chart shows that the price has reached the upper limit of the free roaming range of 1.1710-1.1905 starting on July 31 (the fact that the price is within the range may also be the reason why strategic investors did not offer strong resistance to buyers). A price exit slightly above the August 18 high according to the Marlin oscillator will form a double divergence, and this is a strong reversal pattern for the euro. Also, the euro may continue to rise in the range of 1.2040/55. In this case, the divergence will be reformed into a regular one (dashed line on the daily chart).
The price is above the balance and MACD indicator lines on the four-hour chart, Marlin is in the growth zone, slightly turning down, but not enough for any signal yet. We are waiting for the development of events and a pattern to form for a trend reversal.