EUR/USD threatens 200-day SMA amid USD strength

• EUR/USD dived more than 0.50% towards 1.0810, near the 200-day SMA.
• Hawkish remarks by Thomas Barkin and Susan Collins boosted the USD ahead of Powell’s speech on Friday.
• ECB President Christine Lagarde will speak on Saturday.

On Thursday, the EUR/USD lost momentum and traded weak against the USD. Hawkish remarks made by Federal Reserve (Fed) officials gave the Greenback traction, while the European calendar had nothing relevant to offer. All eyes are now on Jerome Powell and Christine Lagarde's speeches on Friday and Saturday, respectively, for fresh impetus.

On the US side, the USD gathered momentum following Susan Collins' remarks indicating the potential for further rate hikes, and the market sentiment shifted, leading investors to anticipate a more aggressive approach by the Federal Reserve (Fed). This sentiment was reinforced by Thomas Barkin's statement that the Fed would keep rates unchanged for the remainder of 2023 and consider rate cuts in 2024. As a result, US yields experienced an uptick and allowed the USD to gain traction against its rivals.

Datawise, the US reported strong Jobless Claims from the second week of August, contributing to the rise of the US yields.

On the other hand, the European calendar had nothing relevant to offer on the data front, and the Euro recovered some ground against its rivals after trading weak on Wednesday. Investors' focus is set on Saturday’s speech by ECB's Christine Lagarde at the Jackson Hole Symposium, where they will look for further clues regarding forward guidance. As for now, World Interest Rates Probabilities (WIRP) suggest that markets continue to discount 25 basis points in September, October and December by the European Central Bank (ECB), which would take rates to 5%.

EUR/USD Levels to watch

From a technical perspective, EUR/USD retains a bearish outlook for the short term, as observed on the daily chart. The Relative Strength Index (RSI) is below its midline, in negative territory, and exhibits a southward slope. The negative signal from the Moving Average Convergence Divergence (MACD), indicated by red bars, reinforces the growing bearish momentum. 

Support levels: 1.0800 (200-day SMA), 1.0750, 1.0730.

Resistance levels: 1.0860, 1.0900, 1.0910-1.0930 (bearish convergence between the 20- and 100-day SMAs).

EUR/USD Daily chart