The Euro (EUR) is currently experiencing a downward trend, mirroring the overall strength of the US Dollar (USD), as highlighted by Scotiabank’s Chief FX Strategist Shaun Osborne.
Potential for Declines in EUR
Osborne notes that the EUR is at risk of facing another rate cut from the ECB soon, with a 25bps cut already priced in for the September 12th meeting. Recent reports have also indicated divisions among ECB policymakers, with some concerned about a potential recession in Germany and others focused on inflationary pressures.
With a more cautious ECB outlook for the rest of the year, EUR losses may be limited in the short term. The EUR/USD pair has retraced more than a third of its August rally and is likely to continue losing ground in the near future.
Technical analysis shows a bearish ‘dark cloud cover’ weekly candle signal, indicating the potential for further corrective losses in the EUR. Key support levels to watch for are at 1.0990 and 1.0920/40, while resistance can be seen at 1.1070/75.
Expert Analysis and Implications
As the EUR faces the risk of a rate cut and uncertainties within the ECB, investors should be prepared for potential declines in the currency. This could impact various financial markets and investment strategies, especially for those trading in the EUR/USD pair.
It is important for investors to stay informed about central bank policies and economic indicators to make well-informed decisions in the ever-changing forex market. By understanding the current market dynamics and potential risks, investors can better navigate their financial portfolios and adapt to market conditions.