EURUSD Flirts with Key Resistance Ahead of Jackson Hole Symposium

26 Aug 2021

After a 3-day ascend, the EURUSD slid lower during the first half of Wednesday but eventually rebounded and closed the day in the positive territory making it a 4-day streak of gains. At the time of analysis, the price is testing 2 critical resistance levels, the 20 day moving average, as well as the upper resistance line of a falling wedge. Ahead of the Jackson Hole Symposium and the Fed Chair speech on Friday, traders are no doubt monitoring this pair closely from the sidelines.

All Eyes on Jackson Hole Symposium

Key data released on Wednesday include the US Durable Goods Orders, which decreased at a slower pace than the market expectation. The Durable Goods Orders, released by the US Census Bureau, measures the cost of orders received by manufacturers for durable goods planned to last for at least three years, such as motor vehicles and appliances. The figure was better than anticipated as it only declined 0.1% in July as compared to forecast of a 0.5% decline. The core figure was also upbeat with a monthly increase of 0.7%, from 0.6% in the month prior. Despite the positive data for US dollar, EURUSD managed to edge higher.

The greenback’s strength against the Euro faded towards the end of the trading day with the US Dollar Index (DXY) retreating below 93 after hitting an intraday high of 93.12. The DXY then lost its momentum with investors now eagerly anticipating FOMC Chairman Jerome Powell’s speech at the Jackson Hole Symposium.

The Jackson Hole Symposium will be held virtually on Friday as it gathers the world’s most powerful central bankers to discuss on economic issues and policies. As the annual conference is traditionally held in Jackson Hole, Wyoming, the last minute shift to holding it online leads market to suspect that the Fed is still seeing the Delta variant as a major concern and would be unlikely to announce a tapering roadmap in this highly anticipated event.

The Delta variant continues to threaten economies worldwide and it tends to benefit the safe haven US dollar. 

Dovish ECB

On the other hand, the ECB Monetary Policy Meeting Accounts for July which is due to release this evening, is likely to reflect a dovish forward guidance as the Governing Council braces for a “transitory period in which inflation is moderately above target”. Diverging tones between the dovish ECB and hawkish Fed continues to weigh on EURUSD.

Technical Analysis

Momentum remains bearish for EURUSD with the MACD in negative territory and RSI below 50. EURUSD is seen travelling down a falling wedge since 1st June. In order to validate the falling wedge as a reversal pattern, the pair needs to break the upper resistance line and have a daily close above 1.1780. In extension to 1.1780, 1.18 psychological level will be a formidable resistance to watch.

In the event where the pair slides from here, March low of 1.1704 would serve as a strong support. If the pair pierces below this level, it will be headed to test November 2020 low at 1.162.

Key events to watch in the coming week:

Friday, Aug 27

USD – Personal Spending (Jul), Core Personal Consumption Expenditures – Price Index (YoY) (Jul), Jackson Hole Symposium, Fed’s Chair Powell speech

Monday, August 30

EUR – Consumer Confidence (Aug), Industrial Confidence (Aug), Business Climate (Aug), Germany Harmonized Index of Consumer Prices (YoY) (Aug), Pending Home Sales (MoM) (Jul)

Tuesday, August 31

  • EUR – Consumer Price index (YoY)(Aug)
  • USD – Housing Price Index (MoM)(Jun), Chicago Purchasing Managers’ Index (Aug), Consumer Confidence (Aug)

Wednesday, September 1

  • EUR – Germany Retail Sales (YoY) (Jul), Markit Manufacturing PMI (Aug) for Spain, Italy and Germany, Unemployment Rate (Jul)
  • USD – ADP Employment Change (Aug), Markit Manufacturing PMI (Aug)

Thursday, September 2

USD Nonfarm Productivity (Q2), ISM Manufacturing PMI (Aug)

Trade Forex on Phillip MetaTrader 5 (MT5).

Trade Forex at zero commission on Phillip MetaTrader 5, a dynamic platform that offers low spreads. Integrated with Autochartist and Trading Central Indicators, and available on mobile, web and desktop app, you will never miss a trading opportunity with Phillip MT5.

Download Trading Central’s Market Buzz for updates on more topics.

What’s more? Phillip MT5 is now supported on Mac OS! To install, simply download the file below and complete a simple installation process.

An Exchange Traded Fund (ETF) is a marketable security that is formed to track nearly anything, ranging from a specific index, sector, commodity, or increasingly, theme. They are most commonly used to track a basket of stocks, and can typically be accessed through the same channels as regular stocks. ETFs are typically separated into passively-managed ETFs that simply mirror the security they are tracking (e.g. the STI), and actively managed ones that attempt to deliver higher returns or specific investment objectives, often with a pre-specified theme in mind (e.g. ARK Invest’s Innovation ETF).

Why should I trade in ETF CFDs?

  • ETFs have been growing in popularity over the years. 2020 was the best year for ETFs yet, with global equity ETFs seeing more than $1T in inflows within a 12-month period. Using CFDs to gain exposure to ETFs allows for greater capital efficiency because only a portion of the contract value is required as margin to establish a position.
  • ETFs are particularly popular with investors seeking a relatively hassle-free investing experience, while desiring exposure to a range of specific and relatively understandable securities. Trading ETF CFDs brings greater convenience by eliminating the need for traders to hold multiple currencies in order to access global ETFs.
  • An investor wanting exposure to the post-pandemic economic recovery could open a position in the well-known SPDR S&P 500 ETF (SPY), which tracks the performance of the S&P 500. Another investor that may be convinced of the future importance of Environmental, Social and Governance concerns (ESG) may find the increasing selection of ESG-themed ETFs that track a basket of high ESG-rating companies to be a good investment, rather than cherry-picking individual equities by hand. ETF CFDs can act as a powerful tool for traders can profit from both directions of the market by taking on long or short positions.

A look at two ETF CFDs we offer:

1) Has the ARKK been sunk?

ARK Innovation ETF (ARKK) ARKK is an actively managed ETF by ARK Invest that invests in a range of companies based on their innovative and industry-disrupting potential. ARKK’s largest holdings are in companies such as Tesla, Square, and Zoom. ARKK is down around -33% from peaking on 12th Feb and is currently in the red for the year to date as the market experiences a risk-off outflow of funds. Superstar fund manager Cathie Wood has however been consistently doubling down on her bets, buying even more shares in growth stocks that are going through their own tumultuous periods such as DraftKings, Peloton, Teladoc, and Tesla. In her view, ARKK is playing the long game, and remains steadfastly convinced in the long-term prospects of these growth stocks beyond this current bout of volatility. Similarly on outflows, investors are still betting big on ARKK as ARK Invest has only lost about $1.2B in assets this year across all its six funds, compared to seeing an inflow of $15.1B during the same period. Recently, investors have been nervously eyeing ARKK’s basket of tech stocks as their future earnings potential remain vulnerable to erosion through high inflation – the dominant concern of the market in recent weeks. As commodities – the major contributor to the recent heightened inflation fears – drops sharply from record highs, are investor concerns over hyperinflation overblown?

2) Searching for exposure to Asian equities?

iShares MSCI Asia ex Japan ETF (AAXJ) The AAXJ is currently trading -10.6% adrift of all-time highs seen in February, giving up gains in tandem with an Asia-wide equity sell-off at the time. Given that slightly over 40% of the ETF’s holdings are based in China, the ongoing tumult seen in Chinese equities currently have carried over nearly perfectly in the AAXJ, as Chinese investors take a breather after the stellar gains made over the past year. Looking ahead, Asia – and particularly China, is steaming ahead with its economic recovery. China is widely expected to be one of the best-performing major economies this year, providing a major boost to the outlook for corporate earnings. As the rest of Asia and the world gradually opens up their own economies, AAXJ is likely to again benefit from strong Asian outperformance amidst a strengthening trade outlook.

CFD is available for trading on Phillip MetaTrader 5 (MT5).

Features of trading CFD:

  • Trade in both the bull and the bear markets
    The ability to enter a long and/or short position allow traders to take advantage of both rising and falling markets.
  • Smaller barrier to entry
    Flexible and smaller contract sizes. This means that traders will be able to enter into a contract with a modest amount of capital.
  • No expiration date or risk of delivery
    Unlike futures which commonly have a fixed expiration date, CFD allows traders to perpetually hold the position(s). CFD is cash settled, no need to worry about the delivery of the underlying asset.


Benefits of using Phillip MT5:

Trade at zero commission on a dynamic platform that offers low spreads. Integrated with Autochartist and Trading Central Indicators, and available on mobile, web and desktop app, you will never miss a trading opportunity with Phillip MT5.

Register for a FREE 30-day Phillip MetaTrader 5 Demo Account

More Market Trends

Trade Apple and Tesla at zero commission on Phillip MetaTrader 5

Read More >

By Mooris Tjioe, Analyst, Phillip Futures This week in summary ☕️ Airline outlook shaky as rising fuel prices threaten to eat into profits.☕️ Major US bank CEOs

Read More >

AUDUSD started the week on a strong footing and continues to advance for the 3rd consecutive week. The pair is currently trading at a multi-week

Read More >