Euro See Modest Gains On Fed Rate Cut Expectation

Fundamental Analysis

* Fed-Fueled: The EURUSD pair recorded mild gains against the dollar as traders continued to expect the September interest rate cut by the US Federal Reserve (Fed) in September, which dragged the Greenback lower. Recent US inflation, as measured by the change in the Personal Consumption Expenditures (PCE) Price Index, eased slightly from a year ago in June, paving the way for an interest rate cut by the Fed in September. The US PCE inflation continued to slow in June, slowing from a 2.6% annual gain in May to 2.5% in June. The financial markets have priced in nearly 90% of the possibility of a Fed rate cut in September, followed by another cut in November and December, according to the CME FedWatch Tool.

Technical Analysis

* Technical Breakout: EURUSD was traded higher following prior breakout above the previous level 1.08600.  MACD which illustrate bullish momentum signal suggest the pair likely to extend its gains.

* Resistance and Support: If the bullish momentum persists, there’s a strong likelihood that the price will potentially head towards 1.09200. Conversely, a potential reversal is also to be expected and the price could head back towards 1.08050 after it breach back below the level 1.08600.

Understand how technical analysis can help you in this trading opportunity.

Potential Risks

Moving forward, investors will take more cues from further data such as the preliminary Gross Domestic Product (GDP) for the second quarter from Germany and the Eurozone. In the case of stronger-than-expected readings, this could lift the shared currency against the USD.

Know how to manage trading risks with risk management strategies.

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.