The euro looked to recover ground lost yesterday as it strengthened versus its US counterpart a day before Ben Bernanke’s key speech at Jackson Hole.
Getty Images For the euro, tomorrow's Jackson Hole speech is merely the first part in a story that could set the direction of the single currency for the coming months. The downtrend for 2011 and 2012 remains in place, with investors still sceptical that European leaders can really pull themselves together and solve the eurozone crisis.
If Ben Bernanke does seem to be warming to the idea of stimulus then this will at least provide a small boost as the US dollar falls back on expectation that there will be further bond buying by the Fed (and possibly buying of other assets as well). However, the real test will come next week when the ECB meets. The bar for Mr Bernanke has been set pretty high but for Mr Draghi it is even higher; he needs to unveil something impressive for markets to get excited about the prospects for the euro. The August bounce for EUR/USD is notable, but on a longer-term basis it hasn't really disrupted the continual downward progress of the euro. We will soon see whether Mr Draghi can do any better.