FX.co ★ Analysis and forecast for EUR/USD, August 26, 2021

Greetings!

Yesterday, the euro/dollar pair continued to grow slowly. Perhaps, there is no need to hurry as market participants are anticipating Fed Chairman Jerome Powell's testimony at the Jackson Hole Symposium scheduled for Friday. The tone of the speech will determine the trajectory of the US dollar and currencies that are traded against it. The Economic Symposium is usually attended by prominent central bankers, finance ministers, academics, and financial market participants from around the world. This year, the Federal Reserve's annual economic symposium will be held virtually. Oftentimes, the speeches of the Fed Chairman and (or) the President of the ECB provide hints about the future stance on monetary policy and determines the direction of EUR/USD. Once again, I would like to draw your attention to the fact that investors are looking forward to Jerome Powell's speech on Friday hooping to hear about the timing of the bond-buying program tapering. If Powell does not provide comments on this matter, the US dollar is likely to face a strong sell-off. If the Fed President gives more specific details regarding the reduction of asset purchases, the US currency may strengthen across the board.

Despite the fact that yesterday's data on US durable goods orders slightly exceeded economists' expectations, this did not help the US currency to strengthen against the euro. Today, the macroeconomic calendar contains far more important economic reports. At 14:30 MSK, the ECB will publish a report on the monetary policy meeting. At 15:30 MSK, the US will unveil revised GDP data for the second quarter. Besides, the initial jobless claims report is also on tap. I believe that these reports will influence the trajectory of EUR/USD, although market participants will still be waiting for Jerome Powell's Friday speech. Hence, the tone of the speech will impact the weekly results of the pair.

Daily

As for the daily chart, it clearly signals a correction. However, some indicators show a downward reversal. So, the pair may return above the previously broken support level of 1.1752. If it breaks through this level, it is likely to be a false breakout. The pair rebounded above this level and closed two consecutive daily candlesticks above this level. At the same time, the red Tenkan line of the Ichimoku indicator shows that bears may still regain ground. The bulls have been gaining momentum. However, they may be unable to push the pair above the resistance levels of 1.1786-1.1816 where the blue Kijun line of the Ichimoku indicator and the blue 50 moving average are located. In addition, one should pay attention to the important technical level of 1.1800. If reversal patterns of bearish candlesticks appear on the indicated chart or on lower timeframes, this will be a signal for opening short positions for the euro/dollar pair. To open long positions, the pair needs to reach 1.1755-1.1730. However, the pair may decline below 1.1752 in the short term with an almost immediate rebound. If the pair consolidates below 1.1752, the bullish scenario will hardly occur.

Good luck!