Euro Extend Losses On Dovish ECB Remarks

Fundamental Analysis

* Rate Cut Hints: The Euro continues its decline against the dollar, hitting fresh two-month lows due to comments from European Central Bank (ECB) officials and elevated U.S. Treasury yields. ECB member Mario Centeno struck a dovish tone, suggesting the possibility of either a 50 or 25 basis point rate cut depending on forthcoming data. ECB President Christine Lagarde acknowledged that disinflation is progressing as expected, with the inflation target likely to be achieved by 2025. However, she emphasized that interest rates will remain restrictive as long as necessary. Meanwhile, ECB’s Francois Villeroy argued that there would be no need for restrictive rates in 2025, and ECB’s Olli Rehn pointed to a weakening growth outlook, potentially heightening disinflationary pressures. On the U.S. side, the 10-year Treasury note yield increased by 1 basis point to 4.20%, providing further support for the dollar.

Technical Analysis

* Technical Breakout: Recent breakout below the previous support level 1.08100 with MACD illustrating bearish momentum suggest the pair to likely further extend its losses.

*Resistance and Support: If the bearish momentum persists, there’s a strong likelihood that the price will potentially head towards the level 1.07450. Conversely, a potential reversal is also to be expected and the price could head back towards 1.08750.

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Potential Risks

With the absence of significant Eurozone data, investors are shifting their attention to upcoming U.S. economic releases this week. Key reports include Manufacturing PMI, Services PMI, and Durable Goods Orders, which are expected to provide further direction for the markets.

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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.