August 19, 2021

Daily U.S. Session Watchlist: EUR/USD

 EUR/USD has broken below the 1.1700 handle!

Can the pair still extend its intraweek downtrend in the next trading sessions?

Before moving on, ICYMI, today’s Asia-London session watchlist looked at a key resistance zone for EUR/AUD ahead of Australia’s jobs reports. Be sure to check out if it’s still a valid play!

And now for the headlines that rocked the markets in the last trading sessions:

Fresh Market Headlines & Economic Data:

Japan’s factory mood hits 3-1/2-year high – Reuters Tankan

Australia unemployment falls, but distorted by lockdowns

Spending on UK cards dips to 94% of pre-pandemic level

Stocks slide, dollar climbs as taper and virus fears combine

European shares fall 1% on taper fears; commodities slump hits miners

Swiss exports increases in July

Upcoming Potential Catalysts on the Economic Calendar:

Canada’s ADP non-farm employment change at 12:30 pm GMT

U.S. Philly Fed manufacturing index at 12:30 pm GMT

U.S. initial jobless claims at 12:30 pm GMT

If you’re not familiar with the forex market’s main trading sessions, check out our Forex Market Hours tool.

What to Watch: EUR/USD

After breaking below the big 1.1700 support, EUR/USD has taken a breather and is now a few pips up from its intraweek lows near 1.1670.

We don’t have far to look for the cause. While the Fed’s minutes was still pretty dovish, there was enough fuel to fire up speculations of members announcing their tapering as early as next month.

This sentiment highlighted the Fed’s policy divergence with the European Central Bank (ECB), which hasn’t shown signs of tapering just yet. Heck, President Lagarde won’t even attend next week’s Jackson Hole summit!

But can EUR/USD still extend its intraweek downtrend? There aren’t a lot of top-tier reports on tap but we will see the Philly Fed’s manufacturing numbers as well as the latest set of Uncle Sam’s weekly jobless claims data.

If employment numbers print favorably, then we could see another round of dollar-buying that would keep EUR/USD firmly below 1.1700.

But if today’s market themes convince traders that concerns over the impact of the Delta variant and a Fed tapering in early 2022 are fully priced in, then EUR/USD could see mid-week reversals that could boost it back up to the 1.1750 inflection point.