EUR/USD soared to new highs around 1.1080, propelled by the weakening US Dollar. The Dollar dropped to multi-month lows as investors anticipate a Fed easing cycle in September. With the Fed expected to cut rates, the policy gap between the Fed and the ECB may narrow, potentially boosting EUR/USD further. However, long-term prospects suggest the US economy will outperform Europe, hinting that any Greenback weakness could be short-lived.
Looking ahead, market participants will closely watch the FOMC Minutes and speeches by Chair Jerome Powell and BoJ Governor Kazuo Ueda. In the short term, EUR/USD is poised to test its 2024 high of 1.1083 and potentially reach 1.1139. On the downside, support levels lie at 1.0842, 1.0777, and 1.0666, with the upward trend likely to continue as long as the pair stays above the crucial 200-day SMA.
Overall, the current market dynamics suggest a bullish outlook for EUR/USD in the short term, but long-term performance will depend on factors like Fed rate cuts and economic performance in the US and Europe.