EUR/USD – BEARISH BIAS – (1.3100-1.3450).
The euro remains under downward pressure against the US dollar in the near-term falling to its lowest level since September of last year. The euro is being undermined by the deteriorating outlook for economic growth in the euro-zone. The loss of economic momentum in Q2 and escalating tensions between the EU and Russia is serving to undermine business confidence. The weakening economic growth outlook is encouraging speculation that the ECB will have to ease monetary policy further weighing on the euro.
ECB President Draghi is scheduled to speak at the Jackson Hole symposium on Friday, which will be watched closely for any signal that the ECB is moving closer to delivering further monetary easing in the near-term. In contrast, the US dollar continues to strengthen supported by evidence that the US economy is rebounding after expanding robustly in Q2.
The main focus in the week ahead will be Fed Chair Yellen’s speech on the US labour market at Jackson Hole on Friday. Fed Chair Yellen is likely to acknowledge that the labour market is strengthening although there still remains significant slack. Her comments are likely to be interpreted as still dovish helping to dampen further US dollar upside in the near-term.
BTMU