- EUR/USD advanced to new 2024 tops around 1.1080 on Monday.
- The Dollar weakened further and dropped to multi-month lows.
- EMU’s final Inflation Rate comes next, ahead of the FOMC Minutes.
EUR/USD extended its gains for a second consecutive day at the beginning of the week, reaching new 2024 highs around 1.1080, driven by the incessant weakness in the US Dollar (USD).
On the latter, the Greenback accelerated its retracement and broke below the key 102.00 support to print new multi-month lows when measured by the US Dollar Index (DXY), at the time when investors continued to see the Federal Reserve (Fed) starting its easing cycle in September.
Following the CPI release, expectations for a half-point rate cut by the Fed next month diminished, with a smaller rate cut now seen as more likely. This view was also supported by better-than-expected results from other key US fundamentals.
Speaking about rate cuts, the CME Group’s FedWatch Tool indicates the probability of a 25 bps rate reduction at nearly 77%.
While the European Central Bank (ECB) has remained silent, Fed policymakers are expected to share their views as the September meeting approaches. On this, Neel Kashkari, President of the Minneapolis Fed, suggested that it is appropriate to consider the possibility of Fed interest rate cuts in September, citing the growing likelihood of a weakening labour market.
Should the Fed opt for larger rate cuts, the policy gap between the Fed and the ECB could narrow in the medium to long term, potentially supporting a further rise in EUR/USD, particularly as market participants anticipate two more rate cuts by the ECB this year.
However, in the long run, the US economy is expected to outperform Europe, suggesting that any sustained weakness in the Greenback might be short-lived.
Data from the CFTC Positioning Report showed that non-commercial (speculators) EUR net longs retreated to two-week lows in the week ending on August 13.
Looking ahead, the FOMC Minutes will be the salient data release this week, although investors are expected to closely follow the speech by Chair Jerome Powell at Jackson Hole, as well as the testimony before Parliament of BoJ’s Governor Kazuo Ueda.
EUR/USD daily chart
EUR/USD short-term technical outlook
Further north, EUR/USD is likely to test its 2024 high of 1.1083 (August 19) before reaching its December 2023 top of 1.1139 (December 28).
On the downside, the pair's next target is the 200-day SMA at 1.0842, then the weekly low of 1.0777 (August 1) and the June low of 1.0666 (June 26), both of which emerge before the May low of 1.0649 (May 1).
Looking at the big picture, the pair's upward trend should continue, provided it stays above the crucial 200-day SMA.
So far, the four-hour chart shows a considerable increase in the positive bias. The initial resistance level is 1.1083, which comes before 1.1132. On the other hand, there is an instant support at 1.0949 prior to 1.0881, and the 200-SMA of 1.0888. The relative strength index (RSI) increased past 77.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
EUR/USD climbs to new 2024-high above 1.1100
![EUR/USD climbs to new 2024-high above 1.1100](https://editorial.fxstreet.com/images/Markets/Currencies/Majors/EURUSD/world-currencies-53600634_XtraSmall.jpg)
EUR/USD stretches higher in the second half of the day on Tuesday and trades above 1.1100 for the first time in 2024. The US Dollar stays under persistent selling pressure and allows the pair to push higher despite the mixed action seen in Wall Street.
GBP/USD holds above 1.3000, closes in on yearly peak
![GBP/USD holds above 1.3000, closes in on yearly peak](https://editorial.fxstreet.com/images/Markets/Currencies/Majors/GBPUSD/iStock-1178148633_XtraSmall.jpg)
GBP/USD preserves its bullish momentum and closes in on the annual-high it set at 1.3045 in July. The broad-based US Dollar (USD) weakness fuels the pair's rally as investors await comments from Federal Reserve officials.
Gold advances to new record high above $2,520
![Gold advances to new record high above $2,520](https://editorial.fxstreet.com/images/Markets/Currencies/Crosses/XAUUSD/gold-ingot-20089693_XtraSmall.jpg)
Gold extends its uptrend and trades at a fresh record high above $2,520 on Tuesday. The benchmark 10-year US Treasury bond yield stays in negative territory below 3.9%, allowing XAU/USD to continue to stretch higher.
Tether to launch USDT on Aptos blockchain
![Tether to launch USDT on Aptos blockchain](https://editorial.fxstreet.com/images/Markets/Currencies/Cryptocurrencies/Aptos/Aptos-logo_XtraSmall.png)
Aptos announced on Tuesday that Tether is launching its USDT stablecoin on the Aptos blockchain. This move is positive for Aptos as stablecoins such as USDT act as a bridge between the crypto assets and fiat currencies.
Canadian headline CPI matched estimates in July
![Canadian headline CPI matched estimates in July](https://editorial.fxstreet.com/images/Breaking/breaking-news_XtraSmall.jpg)
According to a report from Statistics Canada on Tuesday, annual inflation in Canada, as indicated by the Consumer Price Index (CPI), held steady at 2.5% in July, falling short of market expectations.
Moneta Markets review 2024: All you need to know
![Moneta Markets review 2024: All you need to know](https://editorial.fxstreet.com/images/IT/Testing/Review/FXSBadgeCertifiedBackg_XtraSmall.png)
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.