The euro is recovering some of its losses against the US dollar

The EURUSD has been unable to break through the 1.0840 levels

By Raed Alkhedr | @raedalkhedr | 21 August 2023

  • The euro is displaying signs of improvement

  • European inflation data hints at potential interest rate increases ahead

  • Market attention is currently centered on the upcoming Jackson Hole Forum

Euro's modest recovery and anticipation of key data and ECB forum

In the opening days of the week, the euro is undergoing a mild rebound against the dollar. Following a string of declines, the euro has registered gains against major currencies early in the week, particularly in response to inflation data aligning with market projections.

The data reveals that the Eurozone's consumer price inflation index has held steady at 5.3% annually, while the index excluding food and energy remains unchanged at 5.5%. This stability underscores the current economic climate.

Investors eagerly await pivotal economic data scheduled for this week, encompassing the performance of vital industrial and service sectors in August. These statistics promise invaluable insights into the European economy's health during this year's third quarter.

Simultaneously, market participants closely track Christine Lagarde's upcoming remarks at the Jackson Hole Economic Forum. As President of the European Central Bank, her insights hold significance as indications of the Eurozone's future monetary policy direction.

Predominant market expectations anticipate the European Central Bank's continuation of its strategy for monetary tightening and interest rate hikes, aimed at managing inflation, which remains beneath desired levels.

Crucial technical levels impacting the EURUSD

Within the euro-dollar pair's dynamics, pivotal technical levels emerge as influential factors.

The pair has impressively rebounded from significant support thresholds, situated around 1.0840. These levels have remained unbroken since July's commencement. Presently, the pair is poised closely to the 1.0885 thresholds.

Should the price manage to maintain its position above these support levels, it is probable that the euro's ascension will persist in the imminent period. This could potentially lead to attainments around 1.09 concerning the dollar, and even extend further to approximately 1.0950.

Conversely, if the price effectively breaches the foundational support at 1.0840, prevailing selling pressure might dominate the pair in the medium term. Such influence could drive the price downward, targeting levels roughly near 1.0730. These values denote the lowest points observed since June.

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