EUR/USD robust on 1.18 handle ahead of Jackson Hole

Currently, EUR/USD is trading at 1.1810, up 0.41% on the day, having posted a daily high at 1.1821 and low at 1.1740.

After a positive session overnight, the euro remains robust ahead of the Jackson Hole event. Meanwhile, EUR/USD session gains were on the back of the flash PMI’s out of Germany overnight while markets await Friday’s Jackson Hole speech from ECB's Draghi (3pm ET). 

"The Germany-U.S. 10Y yield spread remains wide, just beyond -180bpts at the lower end of its recent range. Risk reversals are neutral. We are neutral-bearish EUR on the basis of extended, near-record bullish EUR positioning," explained analysts at Scotiabank. 

The Jackson Hole's expectations:

In respect to the Fed's plan to unwind its $4.5 trillion balance sheet, analysts at INF Bank explained that Chair Yellen is unlikely to provide any further hints on timings in her speech, but even if she does, markets are now relatively well primed on the finer details of the Fed's plans. "That's not to say it doesn't matter for markets in the long-run. The chart below shows that there will be a significant amount of additional treasuries for the market to absorb when the Fed slows reinvestment. We think there is a risk that the curve could come under steepening pressure during this process."

EUR/USD levels

EURUSD short-term technicals are neutral-bearish according to the analysts at Scotiabank: "EUR remains bound within the gently descending trend channel off the August 2nd high, with a clear sequence of lower highs and lower lows. We look to near-term resistance above 1.1820 and note the absence of material support ahead of 1.17. Daily signals are neutral-bearish and trendless," noted the analysts.