Looking at the main currency pair frozen in the same place, many say that investors are in no hurry to force events on the eve of an important event – the meeting of central bankers in Jackson Hole. I am confused by one circumstance. Why, after receiving a number of "bearish" signals for EUR/USD, the euro was able to maintain stability against the US dollar? Stronger US GDP growth, hawkish rhetoric of Fed officials, and Philip Lane's statement that the ECB will respond if the Federal Reserve's curtailment of QE causes side effects on the European bond market are unpleasant news for the bulls. But they cling to the current levels by hook or by crook.
In fact, the market knows what Jerome Powell will say in Jackson Hole. A person who is preparing for re-election as Fed chairman is unlikely to argue that everything is bad. It is unlikely that he will nod at the delta strain to justify the future passivity of the Central Bank. Most likely, he will express optimism about the US economy and say that it has adapted to COVID-19. There are no special hints in such rhetoric, so investors' attention will switch to American employment and European inflation, the releases of which will be the key events of the week by September 3. And here there are already some problems appearing for the "bears" on EUR/USD.
According to Bloomberg forecasts, the growth in employment outside the US agricultural sector in August slowed from 943,000 to 763,000. Does this mean that the labor market is losing steam? If so, then dollar fans will be disappointed. Bulls on the euro, on the contrary, may find a pretext for attacks in the acceleration of consumer prices in the eurozone from 2.2% to 2.8%, core inflation - from 0.7% to 1.5%. The last figure is the highest since the end of 2015.
If the series of disappointing data on the US economy continues, Treasury yields are likely to remain under pressure. This will prevent the EUR/USD bears from restoring the downward trend.
Dynamics of economic surprises and bond yields
At the same time, the seasonal patterns in the dynamics of the US economic surprise index suggest that the autumn employment data is more likely to please than upset. Previously, this could be due to the withdrawal of Americans from vacations, now - with the expiration of incentive checks.
Seasonal patterns in the dynamics of US economic surprises
With regard to European inflation, most members of the Governing Council believe that the surge will be temporary. In this regard, as well as taking into account the delta strain's rampant across Europe, it can be assumed that the issues of curtailing the emergency program of asset purchases in September will not be considered. Divergence in the monetary policy of the ECB and the Fed allows selling the main currency pair on growth.
Technically, the inability of EUR/USD bulls to break above the fair value at 1.1815 is a sign of their weakness and a signal for the formation of shorts. On the contrary, closing the week above the level will increase the risks of the continuation of the correction to 1.188, where the target is at 88.6% according to the Shark pattern.
EUR/USD, Daily chart
