The euro

The Euro (EUR) encounters initial resistance near the 1.1240 level against the US Dollar (USD) on Friday, stalling its upward momentum.

After reaching fresh highs within the 1.1240/45 range earlier during Asian trading hours, EUR/USD takes a pause as the Greenback makes a slight recovery attempt.

Although the bounce remains lackluster so far, the US Dollar continues to be under significant pressure as investors anticipate the Federal Reserve nearing the conclusion of its tightening campaign. Recent indicators of cooling US consumer prices and a persistent decline in producer prices have further strengthened this view.

FOMC Governor Christopher Waller’s remarks on Thursday align with the overall hawkish stance from other Committee members, suggesting the possibility of two more rate hikes by the Fed this year.

Lower-than-expected US inflation data for June have reinvigorated the bullish sentiment in the pair. These figures confirm the presence of disinflationary forces in the US economy and reinforce expectations that the Federal Reserve might conclude its hiking campaign sooner than anticipated.

Market participants have largely factored in a quarter-point rate hike by both the European Central Bank (ECB) and the Federal Reserve in their upcoming meetings this month. However, discussions surrounding the future actions of both central banks in normalizing monetary policies remain ongoing, particularly due to concerns about an economic slowdown on both sides of the Atlantic.

In the euro area, the sole release for the week reveals a €0.3B deficit in May. Meanwhile, the focus in the US lies on the preliminary readings of the Michigan Consumer Sentiment for the current month.


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