EUR vs USD tug of war all set for the big stage

The biggest event on the agenda this week is the Jackson Hole meet this Friday.

Markets have been in a good mood to start the week - shrugging off the missile threats from North Korea, the mess in Washington, and the Barcelona terror attacks. But EURUSD has been trending between the 1.1700 and 1.1800 handles for the last 2 weeks, hinting that we're still lacking any real direction in the pair at this point.

But the narrowing range suggests a break is coming, and it lines up perfectly with this week's biggest risk event.

Expectations are still relatively optimistic that Draghi will deliver some sort of announcement regarding the ECB's plans to taper - even with last week's news saying that he may not.

The current bias says that risk is towards the downside for the pair if Draghi doesn't follow through. The ECB has already hinted at a possible risk of the euro overshooting, and if Draghi were to comment on that as well then we could see the pair come under some real pressure on Friday.