We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Bullish
Oil - US Crude
Mixed
Wall Street
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
GBP/USD
Mixed
USD/JPY
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Real Time News
  • Hopes are high for deeper European economic integration as the continent battles back from the coronavirus slowdowns – but will it hold? What impact can this have on #Euro? Find out from @JStanleyFX here: https://t.co/b9ZWRd4cTr https://t.co/gngm5tKqjz
  • The US Dollar could rise against #ASEAN currencies such as the Singapore Dollar as US-China tensions seem to escalate. The Indian Rupee is also looking ahead of local 1Q GDP data.Get your market update from @ddubrovskyFX here:https://t.co/LkEFJViPWY https://t.co/iL7xlHLBiF
  • #Gold has a short-term bullish set-up that may play nicely with USD weakening. The longer and shorter-term path of least resistance remains higher. Get your $XAUUSD technical analysis from @PaulRobinsonFX here:https://t.co/6gt3F9LuGP https://t.co/B4MVrg8f6i
  • The AUD may suffer as relations between Australia and China deteriorate amid dwindling growth prospects. Euro traders will be closely watching progress in talks about a €500b recovery fund proposal. Get your market update from @ZabelinDimitri here: https://t.co/LkEFJViPWY https://t.co/Fo1wlWyz8r
  • The US Dollar is attempting to find direction against the Singapore Dollar, Philippine Peso and Indonesian Rupiah as technical levels hold. The Malaysian Ringgit eyes a key trend line. Get your #ASEAN currencies market update from @ddubrovskyFX here:https://t.co/lcSLkOnJgQ https://t.co/4ofHIpGiTm
  • Trump says he needs to see a strong study on China's actions surrounding virus - BBG
  • The Dollar Index has broken below a multi-week consolidation / the May opening-range lows and keeps the focus lower heading into June. Get your $USD technical analysis from @MBForex here: https://t.co/hkm3nIoyeh https://t.co/SzMeNFyPyp
  • RT @fxmacro: COVIDView: A Weekly Surveillance Summary of U.S. COVID-19 Activity | CDC https://t.co/Gtr0sUoyft
  • RT @globaltimesnews: The #US, rather than #China, will pay a hefty price for imposing sanctions against #HK in the latest broadsides aimed…
  • Could this be the turning point for the #USD? My majors-based #Dollar index is testing key support from April with positive RSI divergence. If sentiment continues improving, that may offer the fundamental scope to continue lower towards March lows https://t.co/vIIvyF8zpU
Euro Vulnerable if ECB's Draghi Disappoints at Jackson Hole

Euro Vulnerable if ECB's Draghi Disappoints at Jackson Hole

2017-08-21 04:07:00
Christopher Vecchio, CFA, Senior Strategist
Share:
Euro Vulnerable if ECB's Draghi Disappoints at Jackson Hole

Fundamental Forecast for EUR/USD: Neutral

  • The Euro was the second worst performing major currency last week after dovish rumors about ECB President Mario Draghi’s Jackson Hole speech proliferated amid concern over the strength of the Euro.
  • Retail traders are starting to jettison their net-short EUR/USD positions – a sign that a turn may be coming.
  • Review our Q3’17 EUR/USD forecast as make our way through mid-August.

Amid positioning sitting at extreme levels, the Euro has found it increasingly difficult to continue its rally in recent weeks. After last week, when the Euro was the second worst performing major currency, it now appears that short-term tops are forming in several EUR-crosses. While EUR/GBP gained +0.60%, EUR/USD lost -0.51%, EUR/JPY fell by -0.52%, and EUR/CAD led the way lower, down by -1.24%.

The coming week will be a true litmus test for whether or not the Euro is actually topping given the high expectations that have carried it here: that the European Central Bank will taper its monetary stimulus perhaps as early as September. Ahead of time, it looks like ECB President Draghi’s upcoming speech at the Federal Reserve’s Jackson Hole Economic Policy Symposium will be a case of ‘buy the rumor, sell the news’ after developments last week.

While the July ECB meeting minutes didn’t offer new insight into recent market developments, a leak on Tuesday started to shape expectations for ECB President Draghi’s speech this coming Friday. Indeed, as we’ve speculated in recent weekly trading forecasts, it finally appears that the ECB may be starting to become concerned with persistent Euro strength.

The reality in FX markets is that with inflation so low, the Euro’s strength may only be tolerated for so long. The ECB’s technical assumption for EUR/USD in 2017 is 1.0800; it closed last week just below $1.1760. Between a strong Euro, middling energy prices, and persistent underperformance in inflation readings, and it’s easy to envision the ECB now taking issue with the market’s hawkish interpretation of expected forthcoming policy adjustments.

Given that the upcoming economic calendar is expected to show a further retracement in growth conditions vis-à-vis the preliminary French, German, and Euro-Zone PMI readings, failure by ECB President Draghi to signal a more hawkish shift in monetary policy could leave the Euro exposed to more downside. Considering that markets remain heavily net-long the Euro (per the CFTC’s COT report), a bit more profit taking could be in store for the Euro by the end of the week.

See our Q3’17 Euro forecast - check out the DailyFX Trading Guides.

--- Written by Christopher Vecchio, CFA, Senior Currency Strategist

To contact Christopher, email him at cvecchio@dailyfx.com

Follow him in the DailyFX Real Time News feed and Twitter at @CVecchioFX.

To receive this analyst’s reports, sign up for his distribution list.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.