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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 that started on Thursday. The markets are expecting central bankers to take the opportunity to provide guidance on the economic outlook, inflation, and monetary policy after the recent string of economic indicators.
The Pound will be in the hands of any forward guidance on policy and views on the economic outlook.
For the EUR, it is a quieter day on the economic calendar. Ahead of the European open, German consumer sentiment figures for September drew interest.
Germany’s GfK Consumer Climate Index fell from -30.9 to -36.5 in September. Economists forecast a decline to -31.8.
According to the August survey, the propensity to save sub-component surged by 17.6 points to an 11-year high of 3.5 points. The jump in the propensity to save reflected a sharp deterioration in consumer sentiment, driven by concerns over energy costs.
By contrast, the economic expectations sub-component increased 0.6 points to -17.6 points. The expectations sub-component is down 58 points from the previous year. Income expectations also bottomed out, rising by 0.4 points to -45.3 points. Income expectations are down close to 76 points from August 2021.
Following positive German economic indicators on Thursday, the markets hoped for a pickup in German consumer confidence.
However, while the stats weighed on the EUR/USD, chatter from the Jackson Hole Symposium will likely be the key driver for the forex markets.
GBP/USD Price Action
At the time of writing, the Pound was down 0.38% to $1.17837.
A bearish start to the day saw the GBP/USD pair fall from a high of $1.18384 to a low of $1,17820. The Pound fell through the First Major Support Level (S1) at $1.17870.
Technical Indicators
The Pound needs to move through S1 and the $1.1825 pivot to target the First Major Resistance Level (R1) at $1.1867.
A pickup in market risk appetite and hawkish BoE chatter would support a return to $1.18 and a Pound breakout from the Thursday high of $1.18641.
In the event of an extended rally, the GBP/USD pair could test the Second Major Resistance Level (R2) at $1.1906.
The Third Major Resistance Level (R3) sits at $1.1987.
Failure to move through the S1 and the pivot would see the Pound test the Second Major Support Level (S2) at $1.1745.
Barring a ‘risk-aversion’ fueled asset sell-off, the GBP/USD should avoid sub-$1.1700 and the Third Major Support Level (S3) at $1.1664.
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 $1.18861.
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 leave the support levels in play.
However, a GBP/USD move through R1 (1.1867) would give the bulls a run at the 50-day EMA ($1.8861) and R2 ($1.1906).
EUR/USD Price Action
At the time of writing, the EUR was down 0.23% to $0.99501. A mixed start to the day saw the EUR strike a high of $0.99770 before falling to a low of $0.99467
Technical Indicators
The EUR/USD needs to move through the $0.9985 pivot to target the First Major Resistance Level (R1) at $1.0022 and the Thursday high of $1.00333.
Following disappointing German consumer sentiment figures, chatter from the Jackson Hole Symposium will be the key driver.
In the event of an extended rally, the EUR/USD pair could test the Second Major Resistance Level (R2) at $1.0070 and resistance at $1.0100.
The Third Major Resistance Level (R3) sits at $1.0154. However, with the gas crisis and plenty of Eurozone economic uncertainty, the EUR will likely struggle to break out from its current range.
Failure to move through the pivot would see the EUR/USD test the First Major Support Level (S1) at $0.9937.
However, dovish ECB member chatter and hawkish Powell chatter would bring the Second Major Support Level (S2) at $0.9901 into play.
The Third Major Support Level (S3) sits at $0.9816.
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 $1.00341. The 50-day and the 100-day EMAs pulled back from the 200-day EMA, delivering bearish signals.
A break-through R1 ($1.0022) would support a run at the 50-day EMA ($1.00341) and R2 ($1.0070).
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 big day for the Dollar Spot Index (DXY). US economic data, including personal spending and inflation, will influence. A pickup in US personal spending and an inflation spike should deliver strong DXY demand.
The main event of the day, however, will be Fed Chair Powell’s speech from Jackson Hole, Wyoming. With the markets easing bets of a 75-basis point interest rate hike, hawkish chatter would likely reawaken the dollar.
This article was originally posted on FX Empire
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