EUR/USD: Sell in peaks may is not a bad idea at the moment
|The single European currency is trading just below the 1,11 level in the early hours of Friday after the significant pressures of the last 2 days having put the pair a long way from the 1,12 highs of the previous Friday.
The course of the exchange rate in recent days fully justified my thoughts as they were reflected in previous articles as indeed the euro showed significant signs of fatigue while so far the position in favor of the US dollar at the level of 1.12 has vindicated me.
Although several data that had acted as a weight on the US currency remain on the table, the dust from these developments has slowly settled with the US dollar limiting its losses and being in the spotlight again.
Bets on Fed's first key rate cut in September after a long time remain high while interest now appears to be gathering if it will be 25 or 50 basis points.
Yesterday's data on the growth path of the US economy in the second quarter of 2024 favored the US currency and significantly reduced the possibility of 50 basis points cuts.
The week closes with high-grade macroeconomic news as we await Eurozone and US inflation data with Fed's favorite index due out in the afternoon which is likely to make more clear the bets on Fed's decisions in September.
In view of the very critical data that could dramatically change the bets I would prefer to stay on hold and lock the profits in favor of the US currency from the one 1,12 levels.
Τhe broader picture of the market in my opinion has not changed dramatically with the European currency having been favored recently as the prospect of a reduction in the interest rate gap between the euro and the dollar is close but let's not forget that similar moves are expected from the European central bank until the end of the year, which will make it difficult for the European currency to move to significantly higher prices.
So a strategy for the exchange rate of sell-in peaks I think is not a bad idea at the moment.
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