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EURUSD Back to 1.17?
The best performing currency today was the euro, which shot above 1.18 on the back of U.S. dollar weakness. This is an important week for the currency that starts with tomorrow’s German ZEW survey and ends with ECB President Draghi’s speech at Jackson Hole on Friday. In between we have Draghi speaking at a ceremony in Germany along with Eurozone PMIs and the German IFO report. The recent appreciation in the currency should have dampened investor and business confidence and while the U.S. dollar tanked today, it should gradually move higher ahead of and on the back of the Fed Summit at Jackson Hole. At this point, it is widely believed that ECB President Draghi won’t be talking about reducing asset purchases at Jackson Hole particularly because they don’t want to send euro any higher ahead of next month’s ECB meeting. But technically, today’s rally in EUR/USD marks a breakout for the pair so we prefer to lay out orders to sell higher. Having traded back above the 20-day SMA, we would not be surprised if the pair retested its August 11th high near 1.1748 and if it doesn’t, we’ll adjust our entry levels as our ideal trades have momentum on its side. The monthly chart shows EUR/USD stalling underneath the 50-month SMA near 1.1860 after breaking above the 23.6% Fibonacci retracement of the 2008 to 2016 decline. If EUR/USD peaks, it should be an easy move down to 1.17