The EURUSD exchange rate is primed for Friday’s central bank meeting in Jackson Hole, Wyoming, U.S.
EURUSD – Daily Chart
The price of the EURUSD is hovering above the previous resistance at 1.5712. The week ahead will define if we test that level or go back to the upside. The price will likely be volume, and the trend should be good in the run-up to the Friday event, and the trend could remain next week.
The anticipation surrounding the Powell speech has been fueled by a growing consensus among analysts that the Fed is poised to ease its monetary policy. That may be misguided after a recent hotter-than-expected Producer Price Index (PPI) report for July. Tom Lee of FundStrat has expressed his hope for a “conciliatory tone to rate cuts”.
The Jackson Hole symposium, hosted by the Federal Reserve Bank of Kansas City, has a track record of being a platform for major policy announcements. The event brings in more than 100 attendees, including global central bankers, to discuss policy and economics.
ING analysts believe that the euro is at the end of its rate cut cycle. “The ECB kept rates on hold in July, and markets are no longer fully pricing another cut from the ECB in this cycle”, they said. “At the peak, the curve prices less than 20bp of easing, but only next year”.
“Our economists note that the US-EU deal is far from ideal, but it does provide a degree of stability for the time being. They do not expect an economic contraction in the second half of 2025 and have slightly upgraded their growth forecast for this year and next. While this has complicated the call for one further ECB rate cut in September, falling inflation still narrowly argues in favour of one more move, delivered before the fiscal impulse out of Germany gains traction,” they added.
The market reaction to the Fed speech on Friday is likely to guide the EUR vs USD for at least the next week. With the euro rate cuts seemingly done, the market will now move depending on the Fed’s path in the coming months.
