Today’s EUR/USD rate technical forex analysis and exchange rate forecast roundup and trading tips after Janet Yellen’s comments.
The Euro to Dollar exchange rate today: 1 EUR =1.11962 USD.
The Pound to Euro exchange rate today: 1 GBP =1.17323 EUR.
The Euro to Pound Sterling exchange rate: 1 EUR =0.85235 GBP.
Prior to Janet Yellen’s speech, the EUR/USD rate had been floating around the week’s opening levels. However, FED Chair Yellen offered support to recent hawkish sentiment providing the US dollar strength into the weekend.
Scotiabank noted that “a decline through 1.1230/1.1190 would suggest a move back towards the range lows in the 1.10-1.09 region will be seen in the coming week or so. While over this support we couldn’t rule out a move to test range resistance in the 1.1400-1.1430 region.”
“Longer term, we are becoming wary that the 1.0450-1.17 range is developing as a “flag” consolidation ahead of a test of key long-term support in the 1.00-0.99 region. We are monitoring this for greater clarity and confidence in this view. For now, further range trading is likely to persist.” say Scotiabank.
Latest Euro/Dollar Exchange Rates
On Sunday the Pound to Euro exchange rate (GBP/EUR) converts at 1.173
FX markets see the euro vs pound exchange rate converting at 0.852.
The euro conversion rate (against us dollar) is quoted at 1.12 USD/EUR.
FX markets see the euro vs swiss franc exchange rate converting at 1.095.
Please note: the FX rates above, updated 28th Aug 2016, will have a commission applied by your typical high street bank. Currency brokers specialise in these type of foreign currency transactions and can save you up to 5% on international payments compared to the banks.
The much anticipated Fed Chair Janet Yellen’s speech at Jackson Hole did not offer much by way of the timing of the rate hike, but it confirmed that the Fed is on course to raise rates considering a series of strong data.
Fed Vice Chairman Stanley Fischer told CNBC in an interview that the rate hike can be as early as September depending on the data.
Following these two speakers, the futures are pricing in a 33% possibility of a rate hike in September. For December, the futures point to a 59.1% possibility of a rate hike.
What did Yellen say in the speech?
The Federal Open Market Committee “continues to anticipate that gradual increases in the federal funds rate will be appropriate over time to achieve and sustain employment and inflation near our statutory objectives,” Yellen said in prepared remarks.
“Indeed, in light of the continued solid performance of the labor market and our outlook for economic activity and inflation, I believe the case for an increase in the federal funds rate has strengthened in recent months.”
Data continues to be strong in the US
As the Fed chair pointed out, most of the recent US data continues to be positive.
The initial claims for state employment benefits dipped by 1000 to 261,000. For the past 77 weeks, the numbers have been below the 300,000 mark, a level indicative of a strong labor market. Reuters reports that this is the longest stretch since 1973.
The Eurozone data, though encouraging, is still mixed.
The economic output and survey readings since the Brexit have been encouraging. Loans to euro zone companies were up 1.9%, year on year in July, the fastest reading in five years and loans to households was up by 1.8%.
However, not all data is robust, the German Ifo business confidence index survey fell from 108.3 points in July to 106.2 in August.
The ECB continues to struggle with stoking inflation, which remains stubbornly low near the zero mark.
Though the analysts believe that the ECB will likely maintain its wait and watch policy, they expect the central bank to extend its asset purchase program beyond its current end-date of March 2017.
The EUR/USD pair broke out of the downtrending channel on August 16, after trading in it since May of this year.
A breakout of such a strong downtrend should have propelled the pair towards the overhead resistance of 1.147 and 1.160 levels.
Nonetheless, the breakout proved to be short lived.
The EUR/USD broke the small uptrend line, as shown in the chart above and is again threatening to enter the downtrending channel.
If the pair manages to find support at the current levels from the 50 exponential moving average and the channel line, then expect a range bound move for a few more days between 1.118 and 1.134.
But, if the pair enters the channel and is unable to breakout of it, it has a first target of 1.104 on the downside.
If this support also breaks, then the pair will slide down to the bottom of the channel at 1.075, as it has done on three previous occasions.
The negative bias will change if the pair continues to trade above the channel.
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