Vasilis Tsaprounis
Independent Analyst
The single European currency is trading slightly below the 1,12 level in a narrow range in early trading hours of the new week after Friday's strong gains.
Fed Chairman Powell's speech in Jackson Hole on Friday acted as a catalyst and the European currency managed to touch 1,12 level.
Fed Chairman sent quite strong signals to markets that the prospect of a September rate cut is closer than ever with bets now high enough that 25 basis points will be the next decision.
Fed Chairman's rhetoric came to further support the bullish momentum the European currency has been in the recent weeks, having now surpassed December 2023 highs and is poised to trigger higher prices.
Although several days have passed recent macroeconomic fundamentals on the fatigue of the US labor sector and a significant easing of inflationary pressures now give room to Fed to proceed with the first cut in key interest rates in many months by narrowing the interest rate gap between the euro and the dollar, something that has weighed heavily on the American currency in recent weeks.
Let's not forget, however, that similar moves are expected from the European Central Bank as its economy remains weak and inflationary pressures are also limited.
The intense speculation that has been set up around the prospect of a rate cut by Fed I believe will definitely show signs of fatigue as the decision is now priced in and relatively soon the US currency may will limit its losses and find itself at better prices.
Today's agenda included the IFO institute survey on the climate and outlook for the German economy which did not provide any surprises while on the other side of the Atlantic stand out Durable Goods orders.
I have implemented my idea as I mentioned in a previous article and I have already positioned myself in favor of the US currency at 1,12 levels considering that the upward momentum of the European currency is close to the end and the exchange rate will correct.
Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer. Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. Risk Disclosure: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.
Recommended Content
Editors’ Picks
EUR/USD stays below 1.1200 after German IFO data
EUR/USD struggles to gain traction and trades marginally lower on the day below 1.1200 in the European session, even though the IFO sentiment figures from Germany came in slightly better than expected. Investors await Durable Goods orders data from the US.
GBP/USD struggles to hold above 1.3200 as USD finds its feet
GBP/USD is off multi-month highs, consolidating gains below 1.3200 on Monday. The US Dollar attempts a minor recovery amid souring risk sentiment, acting as a headwind for the pair. Middle East geopolitical risks and US Durable Goods data are closely eyed.
Gold extends rally beyond $2,520 as geopolitical risks boost haven demand
Gold trades up into the $2,520s on Monday, as a combination of safe-haven demand sparked by rising geopolitical tensions in the Middle East, and increased confidence US interest rates will track lower in the medium-to-long term, make the non-interest paying asset more attractive to investors.
Toncoin price crashes double-digits as Telegram CEO Pavel Durov Arrested
Toncoin (TON) plunged 14% in two days, reaching a low of $5.23 on Sunday. As of Monday, it trades at around $5.73. This bearish sentiment was initiated by the arrest of Pavel Durov, CEO of Telegram, by the Fench authorities on Saturday.
Three fundamentals for the week: Focus on the fragility of the US economy Premium
US Consumer confidence data will provide a gauge of how consumers are feeling. Jobless claims are in focus after Fed Chair Powell's dovish speech. Investors will look to the core PCE index to confirm that inflation is falling.
Moneta Markets review 2024: All you need to know
VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.