EURUSD continues to chop around 1.000 ahead of inflation data. ECB rumored to be deciding between 50 bps and 75 bps. Potential emergency intervention in energy markets also rumored.
advance has cooled slightly following the large move that came as a result of Fed Chair Jerome Powell’s Jackson Hole remarks. With the Fed adamant on reigning in inflation to their 2% target, the ball now moves to the European Central Bank’s court. Rumors are now circulating of a potential 75 basis point hike at the ECB’s September policy meeting, something that seemed impossible just a few months ago.
As inflation continues to remain hot across the Eurozone, economic data may continue to be the catalysts for near-term price action. Should inflation continue to come in hot, bets for 75 basis points next week from the ECB could gain steam. This potentially may buoy the Euro against the Greenback, giving the recent rally more room to run.
Despite the recent bounce, the energy crisis facing the continent continues to be an anchor on any longer-run upside potential. Just yesterday, European Commission President Ursula von der Leyen called for “emergency intervention” in energy markets to aid struggling households and businesses. As winter approaches for the EU, traders may begin to focus more on European energy stockpiles.With EURUSD trading back above parity, the question now becomes whether this is a rally to fade or one to ride.
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