As the Euro (EUR) continues to slip amid softer CPI prints out of Euro-area, Germany, and Spain, OCBC’s renowned FX analyst Christopher Wong provides expert insights into the current market conditions.
EUR/USD Forecast: Expect Lower Trading Levels
Wong anticipates that the European Central Bank (ECB) may lower rates again at its upcoming meeting on 12 Sep, leading to a further decline in the EUR/USD exchange rate. This week’s focus will be on key economic indicators such as manufacturing PMI, services PMI, PPI, retail sales, and GDP data releases. ECB officials are expected to speak this week, with Nagel scheduled for tomorrow and Villeroy on Thursday.
Despite recent ECB statements leaning towards a more gradual approach to policy easing, market expectations suggest a 25bp rate cut at the upcoming meeting and a total of 37bp cut for the remainder of the year. Any disappointing data releases could prompt a more dovish stance from the ECB, causing the EURO to trade even lower.
Currently, the EUR is trading at 1.1070 levels with daily momentum showing a mild bearish trend. Key support levels to watch include 1.1040 (21 DMA), 1.10, and 1.0930 (61.8% fibo retracement of 2024 high to low), while resistance levels stand at 1.12 (recent high) and 1.1280 (2023 high).
(This story was corrected on September 2 at 10:32 GMT to attribute the analysis to “OCBC’s FX analyst Christopher Wong”.)
Analysis and Impact on Your Finances:
In summary, the Euro (EUR) is facing downward pressure amid soft CPI prints and expectations of further rate cuts by the ECB. This could lead to a weakening of the EUR/USD exchange rate in the near future. Investors and individuals with exposure to Euro-based assets should closely monitor key economic indicators and ECB statements to assess the potential impact on their portfolios. It is crucial to stay informed and adapt investment strategies accordingly to navigate the evolving market conditions successfully.