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EURUSD Market Update

8/29/2022 1:10 PM

The EUR/USD pair is moving in a downtrend around 0.9916 and may set another anti-record today, dropping below 0.9880.

The European economy is slowing down amid reports from representatives of PJSC Gazprom about stopping the gas pumping from August 31 to September 2 due to technical work on the turbine of the Nord Stream gas pipeline. Experts doubt that infrastructure repairs will last only a few days, considering the scenario of a complete blocking of Russian energy supplies, which, in turn, will push gas prices to new record levels. Thus, according to data at the close of trading on Friday, a thousand cubic meters on the London Intercontinental Exchange (ICE) cost $3,507.0, a maximum over the past 26 years.

Also, the quotes of the EUR/USD pair are under serious pressure from the dynamics of the US dollar, which set another all-time high, exceeding 109.200 in the USD Index. The reason for such strong growth was the reaction of the markets to the statements made by the head of the US Federal Reserve, Jerome Powell, during his speech at the annual economic symposium in Jackson Hole. The official noted the need to adjust the interest rate to achieve the main goal – reducing inflation and acknowledged that restoring price stability will take time and tough actions from the financial authorities. Powell added that the regulator plans to bring the rate to a stable level (2.25–2.5%), at which it will be held for some time, and investors, assuming that this level can be reached this year, have stepped up their activities.

The trading instrument is kept within the global downwards channel, falling towards the support line. Technical indicators maintain a stable sell signal: fast EMAs on the Alligator indicator are below the signal line, and the AO oscillator histogram forms downward bars in the sell zone, which indicates a possible continuation of the decline and the renewal of the year's low.

Resistance levels: 1.0000, 1.0322. | Support levels: 0.9880, 0.9660.

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