The Euro (EUR) has been trading slightly weaker recently, with a narrow trading range, according to OCBC FX strategists Frances Cheung and Christopher Wong.
Currently, the EUR/USD pair is hovering around 1.1055 levels, with daily momentum showing a mild bearish trend and RSI remaining flat. Key support levels to watch are at 1.1026 (recent low), 1.10, and 1.0930 (61.8% fibo retracement of 2024 high to low), while resistance levels are at 1.12 (recent high) and 1.1280 (2023 high).
The recent slippage in Consumer Price Index (CPI) data from the Euro-area, Germany, and Spain, along with softer manufacturing Purchasing Managers’ Index (PMI) readings, have increased expectations that the European Central Bank (ECB) may lower rates again at its upcoming meeting on September 12. The market has already priced in a 25 basis point cut for this meeting and a total of 36 basis points cut for the remainder of the year.
This week, market focus will be on services PMI, Producer Price Index (PPI) on Wednesday, retail sales on Thursday, and GDP data on Friday. If these data releases continue to disappoint, it could lead to more dovish expectations for the ECB and further downward pressure on the Euro.
Analysis: The Euro has been under pressure due to weak economic data and expectations of further rate cuts by the ECB. Investors should monitor upcoming data releases for clues on the future direction of the EUR/USD pair and be prepared for potential market volatility.