Euro 1.1730 into long-short watershed, market spotlight Powell speech

After rebounding from last week's low of 1.1590 against the dollar, the euro is now gradually approaching the high of 1.1730 in the month. With the exchange rate back on the 50-day moving average (1.1631), the bullish trend formed earlier this year is expected to be re-established.

On Monday (August 18) in the Asian market, the latest trading of the euro against the US dollar was around 1.1700, which was basically the same as the closing price of the previous trading day. The highest intraday hit 1.1716 and the lowest fell to 1.1693, maintaining a narrow range of fluctuations as a whole.

Euro 1.1730 becomes a long-short watershed, with markets focusing on Powell's speech (Figure 1).

Dollar forecast: The euro is expected to hit a monthly high against the dollar

The EUR/USD appears to be building a V-shaped rally after failing to touch the June low (1.1347) at the beginning of the month. With the moving average still maintaining an upward slope, the exchange rate may further recover its losses since the July high (1.1830). According toAihuawaitForex PlatformThe data shows that the euro bullish momentum has strengthened recently.

However, the latest release of US CPI and PPI data reminds the market that inflationary pressures are still persisting. Chicago Federal Reserve President Goolsbee expressed "unease" after the data, which makes the rebound of the euro may only be a short-term performance. Especially after Goolsbee pointed out that "service industry inflation seems to be showing signs of picking up", the market is closely watching how the Federal Reserve will respond. As the 2025 FOMC voting committee, his remarks are superimposed on the approach of next week's Jackson Hole Global Central Bank Annual Meeting (August 21-23), and the euro volatility is expected to rise significantly.

Technically, if the exchange rate can break through the monthly high (1.1730), the rally since August is expected to continue, which may reflect the market's expectation that the Federal Reserve will continue to ease its tightening policy. But if blocked by this resistance level, the euro may fall into a range-bound pattern.

EUR/USD technical chart analysis

Euro 1.1730 becomes a long-short watershed, with markets focusing on Powell's speech (Figure 2).

(EUR/USD daily chart)

The EUR/USD is approaching its monthly high (1.1730), and the rally at the beginning of the week continues. If the exchange rate effectively breaks through or closes above the 1.1690 (78.6% Fibonacci extension) to 1.1750 (78.6% Fibonacci retracement) range, it may further challenge the July high (1.1830).

If it breaks through the September 2021 high (1.1909), the exchange rate is expected to explore the 1.2010 (100% Fibonacci extension) to 1.2040 (161.8% Fibonacci extension) area. But if it is blocked by the 1.1690-1.1750 resistance zone, the gains since the beginning of the month may be reversed.

If the weekly low (1.1590) is lost, the downside target will point to 1.1560 (100% Fibonacci Extension), and the subsequent key support area will be located in the range from 1.1390 (78.6% Fibonacci Extension) to 1.1440 (61.8% Fibonacci Extension), which also covers the month low (1.1392).

At 13:29 Beijing time, the euro was trading at 1.1704/05 against the dollar.

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Disclaimer: The content of this article does not represent the views of the Institute of Foreign Exchange. The content is for reference only and does not constitute investment advice. Investors operate accordingly at their own risk.