EUR USD

EURUSD Outlook: The EURUSD chart managed to extend a wick beyond its yearly consolidation before dropping back to the 1.09 zone, while the US Dollar index (DXY) maintained its trend within the borders of its consolidation. Is a reversal on the horizon?

Market turbulence often presents lots of opportunities, but there is still excess froth to be shed as the unwinding of leveraged carry trades persists for now. For now, the greenback has rebounded, helped in part by the stronger ISM services PMI. Still, in light of the recent events and expectations of a sharper pivot by the Fed than was previously expected, the EUR/USD outlook remains mildly positive.

The EUR/USD earlier was up at 1.10 to test its best levels since January, before dipping on the back of the ISM data. Still, in light of the big drop in the dollar index and expectations of a sharp pivot by the Fed, the EUR/USD forecast will remain positive.

It looks like the United States may be entering recession. For EUR/USD traders, whether incoming data solidifies or weakens that view will likely determine how the pair performs this week. The tone will be set early with the most important piece of information arriving Monday.

This morning’s release of stronger-than-expected Eurozone CPI has made a September rate cut from the ECB a close call, helping to ease the pressure on the single currency. The euro gained ground against most majors except the yen with the latter surging on the back of the Bank of Japan’s surprise 15 basis point rate hike overnight. Attention is now turning to the US side of things as we approach the second half the session with a couple of second-tier economic data to come before the FOMC’s policy decision at 19:00 BST.

While the BOJ hiked more aggressively than expected, they fell short on their ETF tapering, rattling the yen during a bout of 2-way volatility. And the risk of volatility remains with a looming FOMC meeting.

August has historically been the weakest month for GBP/USD and AUD/USD - see what other past tendencies we can glean about forex seasonality in the upcoming month!

As we start the week, the EUR/USD has fallen with the dollar rising across the board. Still, the EUR/USD forecast is not entirely bearish yet even if you take into account the loss of momentum in Eurozone data in recent months. Due to declining US bond yields and increasing expectations of rate cuts by the Federal Reserve, we could see a more meaningful downtrend in the dollar this week.

EUR/USD looks to the ECB rate decision. GBP/USD eases after wage growth keeps August rate cut hopes alive.

At a high level, the US dollar has not shown a consistent trend of strengthening or weakening in one month before, one week after, one month after, or one quarter after US Presidential Election days over the last 10 elections.

The European Central Bank's upcoming policy decision could turn out to be an important event for the EUR/USD pair. While no rate cuts are expected this time, the ECB's stance and any forward guidance will be closely scrutinised. The previous rate cut in June was driven by concerns over economic growth and as inflation showed weakening signs.

EUR/USD weighs up Trump & Powell ahead of US retail sales. FTSE falls on Trump trade and China worries.

Already cutting rates in June, the European Central Bank will be in focus again this week. This time, no rate cuts are expected from the ECB, which, together with reduced political uncertainty in Europe and weakness in US data, should all help to keep the euro supported against the US dollar, maintaining the short-term EUR/USD forecast in bulls’ favour.

EUR/USD recovers from earlier losses with Trump & Powell in focus. FTSE falls following weaker China data.

Large speculators flipped to net-long exposure to EUR/USD futures after a 2-week hiatus, whilst AUD/USD breached the bullish threshold for the first time in three years according to the commitment of traders report (COT).

EURUSD, DXY Analysis: latest CPI figures boosted the sustainability rate of the dis-inflationary track, leading to a drop in US bond yields and boosting the likelihood of a September rate cut

The sustainability of the US disinflationary trajectory towards the Fed’s 2% inflation target will be tested today with the release of the June CPI indicator