The EUR/USD pair slipped to 1.1638 on Wednesday, marking fresh weekly lows near 1.1620 as traders sought safety in the U.S. dollar. The move reflects a cautious market stance ahead of the release of the Federal Reserve’s meeting minutes and Fed Chair Jerome Powell’s upcoming remarks at the Jackson Hole Symposium.
A global risk-off sentiment has bolstered the dollar, with Wall Street’s sell-off—driven largely by tech stocks—spilling into Asian and European markets. Concerns about heightened government intervention in the sector have only amplified the safe-haven appeal of the greenback.
Eurostat confirmed that Eurozone inflation held steady in July, with headline CPI up 2% year-on-year. Core inflation rose 2.3% annually but fell 0.2% month-on-month, underscoring sluggish momentum. ECB President Christine Lagarde, speaking in Geneva, acknowledged the Eurozone’s resilience but cautioned that trade-related risks would weigh on growth in the final quarter.
Geopolitics Keep Traders on Edge
Investor sentiment remains clouded by geopolitical tensions. Initial optimism following talks between U.S. President Donald Trump and Ukraine’s Volodymyr Zelenskyy has faded after the Kremlin signaled little urgency in arranging a direct meeting with Russian President Vladimir Putin.
Moscow’s suggestion to host a Trump-Zelenskyy summit was rejected by Kyiv, leaving peace negotiations uncertain. The lack of progress has added pressure to the euro, with markets showing little faith in a near-term breakthrough.
In Europe’s largest economy, Germany’s Producer Price Index fell 0.1% in July, defying expectations for stability. On a yearly basis, producer prices slid 1.5%, the steepest drop in more than a year, reflecting broader industrial weakness.
Key factors influencing EUR/USD include:
- Safe-haven demand: Dollar strengthened as equities sold off.
- Eurozone inflation: CPI steady at 2%, with core inflation at 2.3%.
- Geopolitical risks: Russia-Ukraine uncertainty weighs on euro.
Technical Outlook: Key Support at 1.1630
From a technical perspective, EUR/USD is testing the bottom of its weekly range near 1.1630, with momentum indicators turning increasingly bearish. The 4-hour RSI dropped below 50, confirming growing downside momentum.
- A break below 1.1630 would signal an end to the early August uptrend, opening the door to 1.1590, aligned with the 38.6% Fibonacci retracement.
- Further declines could expose 1.1560 and 1.1530, marking the 50% retracement and August 5 low, respectively.
- On the upside, resistance lies at 1.1690, with additional barriers at 1.1715 and 1.1730.
Traders now await the FOMC minutes for insight into divisions within the Fed. While the release may prove backward-looking, Powell’s Jackson Hole speech on Friday is expected to set the tone for the dollar and, by extension, EUR/USD.
