Ella 
EUR/USD reclaimed the 1.0800 area but remains under pressure as the EUR/USD closed in negative territory for the fifth consecutive day. The European Central Bank’s hawkish stance failed to lift EUR/USD despite weak economic data from the euro zone. EUR/USD is currently trading around 1.0808, up 0.10% on the day.
ECB President Christine Lagarde told a Jackson Hole symposium that the fight against inflation is not over yet. She stressed the importance of the central bank providing a nominal anchor for the economy and ensuring price stability, while setting interest rates at restrictive levels until the ECB’s medium-term inflation target of 2 percent is achieved. In addition, European Central Bank Governing Council member Martins Kazak said it may be too early to pause interest rate hikes, because stopping the fight against inflation too early could put more pressure on the economy in the future.
In the United States, Federal Reserve (Fed) Chairman Jerome Powell (Jerome Powell) said at the Jackson Hole Economic Symposium on Friday that the Fed is ready to raise interest rates further if necessary and will decide the next step based on data. Powell also said strong economic growth and tight labor market conditions could pave the way for further tightening cycles. He added that if economic data showed no signs of softening, further rate hikes would be appropriate. The dollar attracted some bids against the euro following hawkish rhetoric from Federal Reserve Chairman Jerome Powell.
In addition, Philadelphia Fed President Patrick Harker said that he does not see the need to raise interest rates further at this time and that the Fed should keep rates steady and observe the impact of policy on the economy. Meanwhile, Cleveland Fed President Loretta Mester said gross domestic product and labor market data showed the economy was gaining momentum. She emphasized that current interest rates are not restrictive enough to meet the inflation target and that a low level of economic growth is crucial to moderating inflation.
On the economic data front Friday, the University of Michigan (UoM) consumer sentiment index fell to 69.5 in August from 71.6 in July and was revised up from an initial reading of 71.2. Additionally, the current conditions index fell to 75.7 (from a revised 77.4) from 76.6, and the expectations index fell to 65.5 (from a revised 67.3) from 68.3.
Market participants will focus on German Consumer Price Index (CPI), German Retail Sales and Eurozone CPI data due later in the week. In addition, the ECB will publish the minutes of its meeting on Thursday. In the U.S., there will be releases of the annualized preliminary U.S. gross domestic product (GDP), core personal consumption expenditures (PCE) index and weekly jobless claims. The focus will turn to Friday’s non-farm payrolls (NFP) data. These events are crucial for determining the direction of EUR/USD.
