The EUR/USD pair surged to new highs on Wednesday, surpassing 1.1150 and hitting 13-month highs near 1.1200. This upward momentum was driven by a weakening US Dollar, as investors anticipate rate cuts from the Federal Reserve in September following the release of the Meeting Minutes.
After reviewing the Meeting Minutes, it became evident that the FOMC is inclined towards implementing rate cuts in September to address market concerns. This has led to increased expectations of a quarter-point cut on September 18, with some traders even pricing in the possibility of a 50 bps trim.
Looking ahead, the EU and US PMI figures are set to be released on Thursday, along with the commencement of the Jackson Hole Symposium. Market participants are closely monitoring these events for potential market movements.
EUR/USD Price Forecast
The EUR/USD pair continues to exhibit bullish momentum, with a significant uptrend in August resulting in a 3% increase. The pair is on track for its best weekly performance since November 2022, with a strong push towards 1.1200.
Technical analysis shows that the pair bounced off the 200-day Exponential Moving Average (EMA) at 1.0825, signaling a bullish trend that is likely to continue in the near term.
EUR/USD Daily Chart
Euro FAQs
The Euro, which serves as the currency for 20 European Union countries in the Eurozone, is the second most traded currency globally after the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion. The EUR/USD pair is the most traded currency pair in the world, comprising approximately 30% of all transactions.
The European Central Bank (ECB) in Frankfurt, Germany, is responsible for managing the Eurozone’s monetary policy and interest rates. The ECB’s primary objective is to maintain price stability by controlling inflation or stimulating growth through interest rate adjustments.
Economic indicators such as GDP, PMIs, employment data, and consumer sentiment surveys play a crucial role in influencing the Euro’s value. Strong economic data can attract foreign investments and potentially lead to interest rate hikes, strengthening the Euro.
Trade Balance data also impacts the Euro’s value, as a positive balance indicates higher demand for exports, boosting the currency’s value.
Overall, the current market conditions suggest a bullish outlook for the EUR/USD pair, with potential rate cuts from the Fed and positive economic indicators driving the Euro’s strength against the US Dollar.