According to the results of the past week, the EUR/USD pair has not been able to break out of the 0.9950-1.0050 price range, within which it has been trading for two weeks. Both bulls and bears of the pair made attempts to break through, but in vain – the last five-day trading ended at 0.9955, that is, at the lower limit of the above-mentioned price range.
In general, over the past week, there has been increased volatility in the EUR/USD pair. Bears were marked at 0.9912, and bulls at 1.0080. But neither side was able to build on its success. The contradictory fundamental background balanced the ambitions of both bulls and bears. The news stream dosed down, strengthened and weakened their positions again. As a result, we have a two-week sideways price movement within the 100-point range.
However, certain conclusions can still be drawn based on the results of this two-week "roundabout". In my opinion, the main conclusion is that EUR/USD bulls a priori take a losing position. Yes, on the one hand, they are (so far) able to keep the price from falling into the area of the 98th figure and are able to organize corrective counterattacks in the area of 1.0050-1.0080. But, in fact, this is where their possibilities are exhausted. Despite the fact that the bulls had quite powerful trumps of a fundamental nature on their hands.
Judge for yourself: on Friday before last, Reuters published insider information that many members of the European Central Bank are ready to support/discuss a 75-point interest rate increase at the September meeting. Later, this insider "played with new colors" when the head of the central bank of the Netherlands announced that he would vote in September for a 75-point rate hike. Literally the next day after that, the head of the Bundesbank and the head of the central bank of Estonia voiced similar rhetoric. In the face of this information and verbal pumping, data on the growth of inflation in Germany and in the eurozone were published. Both reports were in the green zone, reflecting the increasing price pressure in the European region. In particular, the overall consumer price index in the eurozone overcame the 9% mark and reached the target of 9.1% in August (with a forecast of growth to 9.0%). The core inflation index, excluding volatile energy and food prices, rose to 4.3%.
EUR/USD traders reacted reflexively to all these events, but as soon as the pair reached the 1.0080 mark, bears came into play again. The upward momentum began to fade, allowing the bears to enter the short position at a more favorable price. It is noteworthy that the so-called "gas issue", which was updated again at the end of the week, did not affect the mood of market participants, although in August this fundamental factor was among the main drivers.
So, on Friday it became known that Russia is completely stopping the Nord Stream gas pipeline for an indefinite period, although initially it was about a three-day suspension for technical work. According to Gazprom representatives, the pipeline was completely stopped due to oil leaks and the need for repairs. Let me remind you that at the end of August, when information about the three-day planned suspension of the Nord Stream first appeared, the cost of gas soared to $ 3,000 per thousand cubic meters. The euro, in turn, was under the strongest pressure throughout the market.
However, this time, despite the news about the indefinite suspension of the gas pipeline, the cost of blue fuel on the contrary decreased. The downward trend has been observed throughout the past week. The price fell below $2,000 per thousand cubic meters on Friday – for the first time in two weeks. According to experts, gas is getting cheaper due to the fact that the EU countries have filled storage facilities by an average of 80% ahead of schedule, although such an indicator was planned only by November.
It would seem that EUR/USD bulls have an excellent reason for correction again. But instead of a broad counteroffensive, traders demonstrated a modest and short-term upward momentum, which deflated under the pressure of dollar bulls.
EUR/USD bears, in turn, failed to develop a downward trend. To do this, they had to go to the area of the 98th figure. But they didn't even manage to hold their positions under the 0.9950 support level. Contradictory Nonfarm data kept the dollar afloat, but did not allow the greenback to organize another rally. The unemployment rate in the US unexpectedly rose to 3.7%, although most experts expected to see this indicator at the same level (3.5%). The salary figures were also disappointing. Employment growth in the non-agricultural sector slowed down somewhat, but at the same time this component came out in the green zone (as well as the growth component in the private sector of the economy).
Nevertheless, despite the very controversial release, the EUR/USD bears won back almost all the lost positions for the final of Friday's trading. After all, traders perfectly remember Federal Reserve Chairman Jerome Powell's speech at the economic symposium in Jackson Hole, where he made it clear that the Fed will not look back at a possible slowdown in the labor market, the central bank will continue to increase the interest rate, solving the problem of high inflation. It is safe to say that the August Nonfarm will not weaken the hawkish mood of the Fed members - at least in the context of the September meeting (following which the central bank should raise the rate by 75 points).
Thus, on the one hand, EUR/USD traders are not yet able to leave the 100-point price range of 0.9950-1.0050. But on the other hand, it is advisable to use any corrective surge within this range to open short positions. Long positions are too risky, given the single currency's vulnerability and the general bearish mood for the pair. Therefore, when the upward momentum fades in the area of 1.0050-1.0070, shorts with targets at 1.0000 and 0.9950 can be considered.