EUR/USD Plunging Into Parity as US Dollar

Pair is moving around 1.0100-1.0270 channel for three weeks now. All attempts of the break through to its upper or lower border ended in failure. These attempts continued until 10th August after the publication of data on inflation in the US, the pair went up, turning the level of 1.0270 from resistance into support. However, it was for a short while of two days and the pair returned to the channel, broke through its lower border on Thursday, and ended the week at 1.0039.

The dollar and the euro approached the equality level of 1.00000 again. The two reasons for the reversal of the pair are, drop in the market’s risk appetites and inflation/energy crisis in Europe. The consumer price index rose there in annual terms crisis caused by the sanctions imposed on Russia because of its invasion of Ukraine. The Chinese economy is not encouraging and the volume of industrial production fell from 3.9% to 3.8% over the month, which is much lower than the forecasted 4.6%. The volume of retail sales fell from 3.1% to 2.7% as well. Against this background, the People’s Bank of China reduced the lowered base lending rate on the yuan sharply, from 3.70% to 2.75%.

New events are the German and Eurozone Manufacturing PMIs on tomorrow. The volume orders for capital goods and durable goods in the US will be known the day after. On Thursday there will be a series of events, German GDP for second quarter, the publication of the minutes of the ECB meeting on monetary policy and four important events in the US that could seriously affect the current trend of the dollar. The release of all these will coincide with the annual economics symposium in Jackson Hole on 25-27 August. The US financial authorities discuss the most important economic issues there, and these indicators are sure to influence their decisions.