EURUSD started to drop again last week and it seems to be in the process to retest the 52-week low of 0.9952. Jackson Hole Meeting, the annual global central banking conference is coming this in this Thursday 25 Aug till the weekend of next week.
The last week’s drop in EURUSD was mainly due to the German Producer Price Index (PPI) which came out at 37.2% YoY vs 32% of forecast. This has led the market to believe that the inflation of the Eurozone has yet to peak.
While US July data is indicating the peak of inflation is over as the YoY Consumer Price Index (CPI) is 8.5% ( instead of the 8.7% forecast) and the MoM PPI is -0.5% ( instead of 0.2% forecast). PPI is always the leading indicator for CPI as that is the cost that producers use to produce the goods and sell them to consumers. The drop in PPI indicates that the upcoming CPI should be dropping. By right, with a lower PPI, USD should turn bearish, but last week most of the US Federal Reserve members provided hawkish comments indicating they should still raise 0.75% at the September FOMC meeting. All of these have contributed to the drop in EURUSD.
In addition to that, US Fed’s Quantitative Tightening will be accelerated based on the plan previously as follows. The effect of QT should double from next month onwards. This will be another bullish factor for the USD.
The upcoming Jackson Hole Meeting will provide more insight on the upcoming plan for US Federal Reserve. Any suprise in the meeting will make EURUSD very volatile and might strongly trend in one direction.
Recommendation
With this outlook, similar to last year, and to be on the safe side, we strongly recommend all Ophiuchus and Limitless EA users to schedule to stop trading for this period starting from 24 Aug till 27 Aug. As Jackson Hole meeting is till weekend of next week, it is recommended not to hold any position over the weekend to prevent any surprise from the meeting in the weekend. On 29 Aug, we also recommend to monitor the market and trend before you start to enable trading.
Disclaimer – Please note that Limitless Trading is not liable for our recommendation and is not responsible for any loss or profit caused by this recommendation. You should assess your personal circumstances and perform your own research to make decisions for your trading.