Despite an uptick in investor sentiment on Thursday, the EUR/USD pair fell below the 1.1000 mark. The surge in US Retail Sales, reaching a high of 1.0% MoM in July, surpassed expectations of 0.3% and reversed the previous month’s contraction. This positive economic indicator helped allay fears of a US recession.
However, the markets reacted cautiously post-Retail Sales. The CME’s FedWatch Tool now indicates a reduced 25% probability of a 50 bps Fed rate cut in September, down from last week’s 70% odds. Nonetheless, a September rate trim of at least 25 basis points is still anticipated, with 75% likelihood on September 18.
US data will continue to influence Fiber traders, with focus on the University of Michigan’s Consumer Sentiment Survey Index on Friday. The forecast suggests an improvement in consumer economic expectations, with the index expected to rise to 66.9 from its recent low of 66.4.
EUR/USD Price Outlook
EUR/USD’s recent decline below 1.1000 signals a potential shift in momentum, with the pair possibly reentering a descending channel trend. While buyers seek support from higher lows, a move towards the 200-day Exponential Moving Average (EMA) at 1.0826 is likely.
EUR/USD Daily Chart
Euro FAQs
The Euro, used by 20 EU countries in the Eurozone, is the second most traded currency globally after the US Dollar. EUR/USD is the most traded currency pair, accounting for around 30% of all transactions. The European Central Bank (ECB) in Frankfurt controls the Eurozone’s monetary policy, aiming to maintain price stability through interest rate adjustments. Strong economic data, inflation levels, and trade balances affect the Euro’s value.
Analysis:
The recent US Retail Sales surge has boosted the EUR/USD pair, but reduced odds of a significant Fed rate cut have tempered market expectations. Traders are closely monitoring US data, specifically the Consumer Sentiment Index, for further insights. The Euro’s value is influenced by various economic factors, making it crucial for traders and investors to stay informed and adapt their strategies accordingly.