09 Jul

EUR/USD Holds Firm Amid Weakening Dollar and Rate Cut Expectations

July 9, 2024

By RoboForex Analytical Department

The EUR/USD pair is maintaining its position close to a multi-week high of 1.0829, benefitting from the weakening US dollar following a disappointing June US employment market report. Market anticipation is now building ahead of an upcoming speech by Federal Reserve Chair Jerome Powell.

Despite the looming potential for political deadlock in France, the euro has remained resilient. Investors are finding reassurance in the belief that the current political situation may act as a deterrent to any drastic fiscal measures from far-right or far-left parties, thereby stabilising the financial landscape.

With a relatively quiet macroeconomic calendar, attention is squarely on the US interest rate trajectory. According to CME FedWatch, the likelihood of a rate cut at the Fed’s September meeting has increased to 76%, up from 66% the previous week. Expectations are also growing for a second rate cut in December.

Jerome Powell’s testimony before Congress, starting Tuesday, will be pivotal for currency markets, as insights into the Fed’s policy outlook could influence exchange rates significantly.

Technical analysis of EUR/USD

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The EUR/USD is navigating through a consolidation range just above the 1.0806 level. There is a strong potential for an upward move towards 1.0900, which is currently being considered. If this level is reached, a retest to 1.0844 may follow before another potential rise to 1.0944. This bullish setup is further supported by the MACD indicator, where the signal line remains above zero and points upwards, indicating a continued upward momentum.

On the H1 chart, the market is poised for further advancement after completing a growth pattern to 1.0840 and a subsequent correction to 1.0820. A move towards 1.0844 is expected. If this level is breached, it could pave the way to 1.0900. The Stochastic oscillator reinforces this outlook, with the signal line currently above 50 and trending upwards, suggesting a strengthening bullish momentum.

Investors will be keenly watching for Powell’s comments and any further economic indicators this week, as they could play a crucial role in shaping short-term market dynamics and currency valuations.

 

Disclaimer

Any forecasts contained herein are based on the author’s particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.


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