EUR/USD Eyes $1.005, with the GBP/USD Targeting $1.19

It is another quiet day ahead for Pound. There are no UK economic indicators for the markets to consider. The lack of stats will leave the Pound in the hands of market risk sentiment and chatter from the Jackson Hole Symposium.

Bank of England Governor Bailey is attending the Jackson Hole Symposium starting today. Central bankers will likely take the opportunity to adjust the dial after the recent string of economic indicators. Expect any forward guidance on policy and views on the economic outlook from BoE Governor Bailey to guide the Pound.

For the EUR, it is a busy day on the economic calendar. Ahead of the European open, German GDP numbers for the second quarter drew interest.

In the second quarter, the German economy expanded by 0.1% according to finalized figures, up from a prelim 0%. Year-over-year, the economy grew by 1.7%. While up from a prelim 1.4%, growth was slower than 3.6% in Q1. The economy expanded by 0.8% (QoQ) in Q1.

Later this morning, Germany’s Ifo Business Climate Index will also provide the EUR with direction ahead of the ECB monetary policy meeting minutes.

While German business sentiment tends to move the dial, the ECB minutes could have a greater significance as the Jackson Hole Symposium gets underway.

The EUR has faced a difficult time, with fears of an economic recession leading the markets to pare expectations of a material shift in the monetary policy environment.

Today’s minutes and chatter from Jackson Hole will confirm or deny the market’s position.

GBP/USD Price Action

At the time of writing, the Pound was up 0.32% to $1.18330.

A mixed start saw the Pound fall to an early low of $1.17835 before rising to a high of $1.18484.

Technical Indicators

The Pound needs to avoid the $1.1796 pivot to retarget the First Major Resistance Level (R1) at $1.1837.

A pickup in market risk appetite would support the Pound at current levels to deliver a breakout session.

In the event of an extended rally, the GBP/USD pair could test the Second Major Resistance Level (R2) at $1.1879 and resistance at $1.19.

The Third Major Resistance Level (R3) sits at $1.1962.

A fall through the pivot would see the Pound test the First Major Support Level (S1) at $1.1754.

Barring a ‘risk-aversion’ fueled asset sell-off, the GBP/USD should avoid the Second Major Support Level (S2) at $1.1713.

The Third Major Support Level (S3) sits at $1.1631.

Looking at the EMAs and the 4-hourly chart, the EMAs send a bearish signal. The GBP/USD sits below the 50-day EMA, currently at $1.19057.

Following last week’s bearish cross, the 50-day pulled back from the 100-day EMA, with the 100-day EMA falling back from the 200-day EMA, delivering bearish signals. A further 50-day EMA pullback from the 100-day EMA would bring support levels into play.

However, a GBP/USD move through R1 (1.1837) would give the bulls a run at R2 ($1.1879) and the 50-day EMA ($1.19057).

EUR/USD Price Action

At the time of writing, the EUR was up 0.35% to $0.99972.

A mixed start to the day saw the EUR/USD fall to an early low of $0.99607 before striking a high of $1.00081.

Technical Indicators

The EUR/USD needs to avoid the $0.9957 pivot to retarget the First Major Resistance Level (R1) at $1.0004.

Following positive German GDP numbers, German business sentiment will need to improve to support the EUR at current levels.

In the event of an extended rally, the EUR/USD pair could test the Second Major Resistance Level (R2) at $1.0046 and resistance at $1.0050.

The Third Major Resistance Level (R3) sits at $1.0135.

A fall through the pivot would see the EUR/USD test the First Major Support Level (S1) at $0.9915 and support at $0.99.

However, weak German business sentiment and dovish ECB meeting minutes would bring the Second Major Support Level (S2) at $0.9868 into play.

The Third Major Support Level (S3) sits at $0.9779.

Looking at the EMAs and the 4-hourly chart, the EMAs send a bearish signal. Following last week’s bearish cross, the EUR/USD sits below the 50-day EMA, currently at $1.00530. The 50-day and the 100-day EMAs pulled back from the 200-day EMA, delivering bearish signals.

A break-through R1 ($1.0024) would support a run at R2 ($1.0046) and the 50-day EMA ($1.00530).

However, a further pullback from the 50-day EMA would bring the Major Support Levels and sub-$0.99 in play.

The US Session

It is a relatively busy day ahead on the US economic calendar. Weekly jobless claims and Q2 GDP numbers will provide the DXY with direction. However, FOMC member chatter from Jackson Hole will be of more influence ahead of Fed Chair Powell’s speech on Friday.

Hawkish chatter and the Dollar Spot Index should return to the 109 handle to bring 110 back into view.