EUR/USD Bounces Towards 1.0900 Amidst Anticipation of Key US Data and Jackson Hole Symposium

EUR/USD is staging a recovery towards the 1.0900 level, buoyed by renewed buying interest near 1.0850 early on Thursday. This resurgence comes as the US dollar takes a step back, accompanied by a decline in US Treasury bond yields. Market participants are gearing up for pivotal US economic data releases and the highly anticipated Jackson Hole Symposium. The currency pair’s rebound gains traction as it finds support above the 200-day Simple Moving Average, leveraging the weakened stance of the US Dollar. However, while prospects for further advancement persist, the overall trajectory maintains a downward bias.

The Euro hit its recent low subsequent to the unveiling of the preliminary August PMIs for the Eurozone. The Composite PMI dipped from 48.6 to 47, undershooting the anticipated 48.5 mark. Notably, the Services PMI descended into contraction territory at 48.3, while the Manufacturing PMI showcased a slight improvement by edging from 42.7 to 43.7. Further influencing the landscape, preliminary EZ Consumer Confidence slid from -15.1 to -16, a drop that contrasts with the market consensus of -14.3. These latest economic indicators have tempered hopes for a potential rate hike by the European Central Bank (ECB) during the upcoming September meeting, subsequently impacting the Euro’s performance.

Across the Atlantic, Wednesday’s data releases painted a mixed picture for the US economy. The S&P Global Composite PMI retreated from 52 to 50.4, accompanied by a Manufacturing PMI drop from 49 to 47, defying expectations of a modest rise to 49.3. Simultaneously, the Services PMI edged down from 52.3 to 51. The aftermath of the PMI figures ushered in losses for the US Dollar across the board, prompting a corrective movement. In a separate report, July’s New Home Sales displayed improvement, reaching a 714K (annual rate), up from the prior figure of 684K.

On the same day, US Treasury yields experienced a notable pullback, with the 10-year yield receding to 4.20%, and the 2-year yield dipping to 4.95%. Concurrently, US equities demonstrated gains averaging over 1%. The conjunction of falling yields and heightened risk appetite exerted downward pressure on the US Dollar, contributing to the recovery of the EUR/USD pair.

As Thursday unfolds, market-watchers are anticipating releases such as weekly Jobless Claims and Durable Goods Orders. Nevertheless, the Jackson Hole Symposium takes the spotlight, with market attention pivoting towards speeches by Fed Chair Powell and ECB President Lagarde scheduled for Friday. These addresses are expected to provide crucial insights into the monetary policies of these two pivotal central banks, influencing market sentiment and potentially steering the course for EUR/USD.