EUR/USD’s failure to materially capitalize on a plethora of upbeat developments is exposing the pair weakness, according to FXStreet’s analyst Yohay Elam.
“The most significant positive development has come from the Sino-American front. US Trade Representative Robert Lighthizer and Chinese Vice Premier Liu He held a phone call and both concluded they made progress and that there is more to come. Moreover, President Trump refrained from bashing Beijing on the first night of the Republican convention. Keeping the topic off the agenda also helps improve the market mood and weigh on the safe-haven dollar.”
“Another positive development is Germany’s upward revision of its GDP figures for the second quarter. According to the final read, the continent’s largest economy squeezed by 9.7% and not 10.1% originally reported. The change may seem minor, but revisions are rare in this indicator. The German IFO Business Climate is set to show stability in August after a bounce in July.”
“Jerome Powell, Chairman of the Federal Reserve, is set to deliver a highly anticipated speech on Thursday, at the virtual Jackson Hole Symposium. According to reports, he may open the door to allowing inflation to catch up – overheat in one year to compensate for slow price rises beforehand. That shift implies keeping interest rates lower for longer and thus weighing on the dollar. Nevertheless, EUR/USD’s gains are limited.”
“Rising coronavirus cases in the old continent remain of concern, as doubts about returning to school creep in.”
“The accumulation of positive news– outweighing the negatives – may eventually trigger a rally, yet the current hesitation implies that any adverse development could send it down.”