After a period of losses, EUR/USD has managed to climb back up to around 1.0940, signaling a potential shift in momentum for the pair. The Dollar, on the other hand, has been trading in a volatile manner in the low-103.00s, reflecting the cautious sentiment among investors.
Looking ahead, key US economic data releases such as CPI and Retail Sales will provide insight into the Fed’s potential interest rate decisions in September. This will also shed light on the current state of the US economy and address concerns about a possible recession.
Meanwhile, Economic Sentiment indicators for Germany and the Eurozone are expected to decline, indicating a slowdown in economic activity in the region. This, coupled with the upcoming Fed meeting in September, could impact the policy divergence between the Fed and the ECB.
Market expectations for a 50 bps rate cut by the Fed have decreased, but the possibility of a rate cut still remains. This could lead to a narrowing of the policy gap between the Fed and the ECB, potentially supporting a rebound in EUR/USD in the medium term.
However, in the long term, the US economy is anticipated to outperform the Eurozone, suggesting that any weakness in the USD may be temporary. The technical outlook for EUR/USD points to a potential challenge of the August high before reaching higher levels, with support levels also identified for potential downside movements.
Overall, the current market dynamics suggest a cautious yet optimistic outlook for EUR/USD, with key economic data releases and central bank decisions expected to drive future price movements.
EUR/USD Short-Term Technical Outlook
According to the daily chart, EUR/USD is poised to test key resistance levels in the short term, with support levels also identified for potential downside movements. The four-hour chart indicates a range-bound theme for now, with key resistance and support levels to watch out for.
Analysis:
The recent rebound in EUR/USD to 1.0940 signals a potential shift in momentum for the pair. Key economic data releases and central bank decisions will play a crucial role in determining future price movements. While short-term technical outlook points to potential resistance and support levels, the overall market sentiment remains cautious yet optimistic. Investors should closely monitor upcoming data releases and policy decisions to gauge the future direction of EUR/USD and its impact on their finances.