Euro Dips on Growing ECB Rate Cut Speculation

Fundamental Analysis

* ECB Cut Watch: The euro extended its losses against the dollar amid growing expectations that the European Central Bank (ECB) will cut rates at its September 12 meeting. The ECB is set to release economic projections, likely showing downward revisions in growth and inflation. Money market traders are pricing in rate cuts of 50 to 75 basis points by year-end, while many analysts anticipate a 25-basis-point reduction. Additionally, the pair is under pressure as demand for the dollar rises following recent U.S. jobs data, dampening hopes for a Fed rate cut.

Technical Analysis

* Technical Breakout: EURUSD was traded lower while currently testing the support level 1.1025. MACD which illustrate bearish momentum signal with the recent formation of death cross suggest the pair to likely further extend its losses after it breaks below the support level.

*Resistance and Support: If the bearish momentum persists, there’s a strong likelihood that the price will potentially head towards 1.09450 after it breaches below the level 1.10250. Conversely, a potential reversal is also to be expected and the price could head back towards the level 1.11100.

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Potential Risks

Looking ahead, investors will turn their attention to key economic data, with Germany’s inflation figures scheduled for Tuesday and the Eurozone’s industrial production data coming on Friday. Additionally, markets anticipate heightened volatility as the U.S. Consumer Price Index (CPI) for August is set to be released on Wednesday.

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Monitoring

Stay updated on US and Eurozone data, central bank updates and any shifts in the US Dollar’s strength by following PU Prime’s market insights and daily financial news.

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Disclaimer: Trading derivatives involves high risks, and market conditions can change rapidly. The content is for informational purposes only and should not be considered as financial advice. Traders should conduct their own research and consider risk management strategies.