- EUR/USD recovers from below parity and eyes key events.
- The Fed and German inflation data are important for the week ahead.
EUR/USD bulls have moved in from below parity in a correction of three prior weeks of supply. The single currency ended down 0.13% on the final day of last week, falling from a high of 1.0255 and reaching a low of 1.0129.
The euro has picked up a bid following a more hawkish rhetoric coming from the European Central Bank. The ECB has introduced a new Transmission Protection Instrument to keep sovereign bond yields in check while at the same time hiking rates by 50bps in a surprise move.
However, at the same time, Italian politics has moved into the spotlight. ''The Italian political crisis was worsening while subsequent PMI data have suggested that recession risks for the Eurozone could be rising,'' analysts at Rabobank said.
''This news flow suggests that the ECB may be forced to show whether it can walk the walk and prevent a deepening crisis from developing in the region in the coming months. In view of recession risks, Italy’s collapsed government and a very strong USD, the ECB has a lot of cards stacked against it.''
The week ahead
Meanwhile, the week ahead will hold both key inflation numbers from the region as well as the Federal Reserve interest rate decision.
''German inflation likely fell for the second consecutive month due to a decline in fuel prices and a cut in energy taxes, while we think euro area inflation moved sideways in July,'' analysts at TD Securities said.
''As we mentioned here, German and euro area inflation will remain “artificially” low until country-specific subsidies terminate at the end of August, thus resulting in a spike in September inflation.''
As for the Fed, the central bank is expected to follow up June's large 75bp rate increase with a similar move in July, lifting the target range for the Fed Funds rate to 2.25%-2.50%.
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 holds steady above 1.0550 on modest USD weakness
EUR/USD struggles to gather recovery momentum but clings to modest daily gains above 1.0550 in the second half of the day on Monday. Although the US Dollar corrects lower following the previous week's rally, the cautious market mood makes it hard for the pair to push higher.
GBP/USD stabilizes above 1.2600 following previous week's drop
GBP/USD defends minor bids above 1.2600 in the American session on Monday, while the negative shift seen in risk sentiment caps the pair's upside. The Bank of England Monetary Policy Hearings and UK inflation data this week could influence Pound Sterling's valuation.
Gold benefits from escalating geopolitical tensions, rises above $2,600
After suffering large losses in the previous week, Gold gathers recovery momentum and trades in positive territory above $2,600 on Monday. In the absence of high-tier data releases, escalating geopolitical tensions help XAU/USD hold its ground.
Bonk holds near record-high as traders cheer hefty token burn
Bonk (BONK) price extends its gains on Monday after surging more than 100% last week and reaching a new all-time high on Sunday. This rally was fueled by the announcement on Friday that BONK would burn 1 trillion tokens by Christmas.
The week ahead: Powell stumps the US stock rally as Bitcoin surges, as we wait Nvidia earnings, UK CPI
The mood music is shifting for the Trump trade. Stocks fell sharply at the end of last week, led by big tech. The S&P 500 was down by more than 2% last week, its weakest performance in 2 months, while the Nasdaq was lower by 3%. The market has now given back half of the post-Trump election win gains.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.