Euro Climbs on Hawkish Fed Rhetoric Amid Rate Hike Expectations
The Euro (EUR) traded around 1.1590 in early European hours on Monday, maintaining its upward momentum above the 100-day simple moving average. The pair's strength is being bolstered by hawkish comments from Federal Reserve Chair Kevin Warsh at the Jackson Hole economic symposium.
Warsh stated that if policymakers don't get the confidence they need that inflation is heading down to 2%, 'we have work to do.' This reinforced expectations for a potential September rate increase, providing a tailwind for the US Dollar (USD) against the Euro (EUR).
Strategists at Commerzbank noted that 'the main theme on Friday was the hawkish repricing of Fed expectations' after Warsh's Jackson Hole appearance. They emphasized that Warsh warned inflation is 'not meaningfully slowing' and reiterated that the Fed's 2% inflation objective is 'firm and fixed.'
The technical picture remains mildly bullish for EUR/USD, with the pair trading above the 100-day SMA and hovers just below the 20-day Bollinger SMA. The 14-day Relative Strength Index (RSI) stands at 52.8, marginally above the neutral threshold.