The coming week will be devoted to searching for signals regarding the Fed's further actions. The most important event is the virtual forum in Jackson hole, which will open with a speech by Fed Chief, Powell, on Thursday at 13.10 Universal time. Markets will evaluate Powell's speech in terms of how ready the Fed is to take steps to "Japanize" the US economy due to the fact that all traditional tools have been used up.

The minutes of the last FOMC meeting already contained clear signs of expanding the Fed's arsenal of available funds, including targeting the yield curve and the possibility of using negative rates, which inevitably raises the question of changing the range of inflation targets. Until the Fed identifies new instruments, the markets will wait, which means they will mostly trade in a sideways range until at least Thursday.

EUR/USD

Friday's PMIs highlighted downside risks to economic growth in the euro area. Composite PMI declined to 51.6p, which indicates very weak growth, and we will most likely see a deterioration in the main macroeconomic indicators in the near future. It is clear that the weak service index could be attributed to coronavirus-related constraints, which sharply reduced activity in sectors related to the holiday season, but the manufacturing PMI barely outgrew the 50p level, despite relatively cheap oil.

In Germany and France, the results are exactly the opposite - the German PMI rose 51 to 53p, new orders are growing, while in France, the manufacturing index fell into a negative zone to 49p. The opposite results for the two largest economies in the Euro zone point to uncertainty about the PACE of GDP recovery in Q3 and increase risks, which will also affect demand for the Euro.

The CFTC report showed that the increase in the bullish position for the Euro is finally coming to an end. In the reporting week, the growth was only 58 million, saturation was achieved, while the first reduction in the net short position for the dollar in two months was noted.

The estimated fair price continues to decline, which means a growing probability of a reversal or at least a correction from the levels reached.

The Euro pushed off from the upper border of the channel, the lower border of which is the nearest target. The decline to the support zone of 1.1620/40 looks reasonable from both technical and fundamental points of view.

GBP/USD

In contrast to the eurozone countries, the PMI indices in the UK were unexpectedly strong. The manufacturing sector grew from 53.3p to 55.3p, while the services sector from 56.5p to 60.1p. Retail sales growth in August was also higher than forecasted, the only negative report was provided by CBI - the volume of industrial orders -44% against the forecast -35%.

The pound looks clearly more confident than the euro if we rely only on macroeconomic criteria, but politics can be decisive. There is still no breakthrough in the Brexit negotiations, the EU does not intend to make concessions and rejects Britain's claims for free access to EU markets without adopting the entire package of EU security standards. As Barnier, the EU's Chief Negotiator, stressed, Britain is not changing its approach to negotiations, which makes it unlikely that an agreement will be reached.

At the same time, the CFTC report for the pound was positive, the weekly growth of 0.768 billion – the highest among the G10 countries, combined with good PMI data on the services sector gives grounds for a positive mood of players for the pound. The settlement price is still significantly lower than the spot price, but it is directed upwards, so the depth of correction of the pound may be less than for the Euro.

The pound looks neutral at the opening of the week. It has not reached the key support at 1.30. A corrective rise to 1.3140/60 is likely, after which either a continuation of consolidation, or another attempt at a bearish reversal and another test of support for 1.30, followed by a decline to 1.2800/20.