EUR/USD drills 10-week low near 1.0800 with eyes on ECB’s Lagarde, Fed Powell’s speech

• EUR/USD remains depressed after refreshing multi-day low, down for the second consecutive day.
• Broad US Dollar strength, cautious mood ahead of key central bankers’ speeches at Jackson Hole weigh on Euro pair.
• Hawkish ECB talks fail to put a floor under Euro prices as US data, yields favor Greenback.
• Mid-tier German, US data may entertain traders but major attention will be given to ECB, Fed talks.

EUR/USD bears keep control at the lowest level in 2.5 months despite struggling with the 200-DMA support amid the early hours of Friday’s Asian session. The Euro pair dropped the most in a month the previous day, as well as refreshed the multi-day bottom before a few hours, while flirting with the 1.0800 level.

In doing so, the Euro pair fails to justify the recently released hawkish statements from the European Central Bank (ECB) policymaker amid a broadly firmer US Dollar and cautious mood ahead of the speeches from ECB President Lagarde and Fed Chairman Jerome Powell.

“Underlying inflation in the eurozone remains sticky and monetary policy needs to be more stubborn than price growth,” said ECB policymaker and Bundesbank Chief Joachim Nagel during an interview with Bloomberg.

On the other hand, former St. Louis Federal Reserve President James Bullard underpinned the US Dollar’s strength with his hawkish remarks. “The reacceleration could put upward pressure on inflation and thus makes it impossible for the Fed to start cutting rates anytime soon,” said Fed’s Bullard in an interview with Bloomberg. While Bullard was hawkish, Federal Reserve Bank of Philadelphia President Patrick Harker teased an end of rate hike trajectory whereas Boston Federal Reserve President Susan Collins defended a “higher for longer” bias for rates.

It’s worth mentioning that the US data was mostly mixed but the details joined hawkish Fed talks to impress the Greenback buyers and weighed on the EUR/USD price the previous day, especially amid the broad risk-off mood.

As per the latest rounds of the US data, the Durable Goods Orders for July marked the biggest slump since April 2020 by posting -5.2% MoM figure versus -4.0% expected and 4.4% prior growth (revised). However, the Durable Goods Orders ex Transportation marked a positive surprise with 0.5% figures versus 0.2% market forecasts and previous readings. Further, the Nondefense Capital Goods Orders ex Aircraft also improved to 0.1% while matching the analysts’ estimations compared to -0.4% marked in June.

Additionally, the Chicago Fed National Activity Index for July improved to 0.12 from -0.33 prior whereas the Kansas Fed Manufacturing Activity Index for August was 12.0 versus -20.0 previous readings. On the same line, the weekly figures of the Initial Jobless Claims and Continuing Jobless Claims eased and signaled positive employment conditions.

While portraying the mood, Wall Street closed in the red whereas the benchmark US 10-year Treasury bond yield prints mild weekly losses despite rising to the highest level since 2007 earlier in the week, as well as posting firmer closing the previous day. That said, the S&P500 Futures appears dicey near 4,390 after reversing from the weekly top with heavy losses.

Looking forward, the final readings of Germany’s second quarter (Q2) Gross Domestic Product (GDP) will precede the nation’s ZEW sentiment data for August to entertain the EUR/USD traders. Following that, the mid-tier US sentiment and inflation clues will also entertain the intraday traders. However, major attention will be given to the speeches of ECB’s Lagarde and Fed’s Powell as market players seek clues of policy pivot.

Technical analysis

A daily closing beneath an ascending support line stretched from mid-March, now immediate resistance surrounding 1.0815, keeps the EUR/USD bears hopeful even if the 200-DMA level of 1.0800 prods the Euro sellers ahead of the key events.