EUR/USD advances towards 1.0000 despite potential German energy crisis, Jackson Hole eyed

• EUR/USD is scaling higher towards 1.0000 amid uncertainty over Fed’s commentary at Jackson Hole.
• Two schools of thought on the Fed’s commentary have brought volatility in the DXY.
• German energy supply issues could heat up further on supply cut from Nord Stream 1 pipeline.

The EUR/USD pair has sensed buying interest after remaining sideways around 0.9960 in the Tokyo session. The pair is marching north to recapture the magical figure of 1.0000 as the US dollar index (DXY) is trading vulnerable at the open. The DXY has slipped to near 108.50 after facing selling pressure around 108.50.

Mixed responses from the market participants on Federal Reserve (Fed) chair Jerome Powell's commentary at Jackson Hole Economic Symposium on guidance over interest rates is bewildering investors. Two schools of thought on the Fed’s stance over interest rates after a contraction in the private sector are resulting in volatile moves in the DXY.

The consequences of hiking interest rates vigorously by the Fed have resulted in a meaningful decline in the PMI data. Therefore, one school of thought believes that the Fed should slow down the pace as a decline in economic activities could affect the confidence of the private sector in the economy. And, the second school of thought favors the continuation of pace in hiking interest rates as achieving price stability is the foremost priority.

On the Eurozone front, the odds of a German energy crisis are scaling higher as Nord Stream 1 pipeline for energy supply to Germany from the Baltic Sea is going under unscheduled maintenance for the last three days of August. In times, when the German energy market is already facing supply issues, more supply tightening may elevate the energy prices significantly.