EUR/USD Forex Signal: Sell-Off to Intensify – 29 August 2022
There is a possibility that the EUR/USD will continue falling as sellers target the next key support at 0.9850.
Sell the EUR/USD and set a take-profit at 0.9850.Add a stop-loss at 1.0035.Timeline: 1-2 days.
Set a buy-stop at 1.0025 and a take-profit at 1.0095.Add a stop-loss at 0.9950.
The EUR/USD price continued its bearish trend after a series of hawkish statements by the European Central Bank (ECB) and Federal Reserve officials. It dropped to a low of 0.9963, which was slightly lower than last week’s high of 1.0095.
Hawkish ECB and Fed
The EUR/USD resumed its bearish trend as investors reacted to last week’s Jackson Hole Symposium comments. In his speech, Jerome Powell reiterated that there will be some pain for both investors and consumers as it continued to battle the soaring inflation.
He said that the bank will continue with its hawkish tone until it sees a clear sign that inflation has started dropping. Data published this month showed that the headline inflation in the US dropped from 9.1% in June to 8.7% in July.
And on Friday, the closely watched PCE data showed that the country’s inflation continued dropping as gasoline prices pulled back. Therefore, analysts were expecting the Fed to start slowing down its hawkish tone in the coming meetings.
The EUR/USD price also dropped after several ECB officials reiterated that the bank will continue hiking rates in the coming months. Speaking at the Jackson Hole Symposium, Isabel Schnabel and Francois Villeroy Galhau said that a large sacrifice will be needed to tame inflation.
The two officials believe that the bloc’s inflation will continue soaring in the coming months. Analysts expect that the bloc’s inflation rose to a record 9% in August as gas prices surged. European gas prices rose to a record high of 343 euros per megawatt hour, which is sharply higher than where they were when the year started.
As a result, the EU will convene an emergency meeting to deliberate on the way forward since these prices mean that the bloc will likely head to a deep recession.
The four-hour chart shows that the EUR/USD pair has been in a strong bearish trend in the past few weeks. It managed to move below parity level for the second time this year last week. As a result, the pair remains below the 25-day and 50-day moving averages and is slightly above last week’s low of 0.9903.
The EUR/USD pair has also formed what looks like an inverted cup and handle pattern. Therefore, there is a possibility that it will continue falling as sellers target the next key support at 0.9850.
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