EURUSD:
The euro/dollar remains under pressure amid the strengthening of the US currency following the launch of new US import tariffs on August 1 and the Fed’s continued hawkish tone. At its midweek meeting, the Fed kept rates in the 4.25-4.50% range and gave no signals of imminent easing, while the US labor market will receive a new batch of employment data today, which supports demand for the dollar in anticipation of moderately strong figures. The constructive backdrop for the USD is reinforced by the fact that tariff policy is redistributing capital flows in favor of the US and increasing the premium for dollar liquidity.
The fundamental background for the euro is neutral to weak: on July 24, the ECB left rates unchanged, pointing to the achievement of the inflation target and the need for a “pause” to assess the impact of trade shocks. Preliminary estimates for the largest eurozone economies in July indicate that the overall CPI is close to 2%, and unemployment in the region is stable at a low level. However, growth remains sluggish, and external demand is under pressure due to global tariff uncertainty, making the euro vulnerable to every glimmer of strength in the dollar.
Global risk-off sentiment due to deteriorating business activity in Asia and increased volatility in stock markets remains an additional supporting factor for the USD. Against this backdrop, inflows into safe-haven dollar assets continue, while interest in capital export currencies declines. Given the balance of risks and the news background, the baseline scenario assumes a weakening of the EURUSD in the current horizon.
Trading recommendation: SELL 1.1425, SL 1.1455, TP 1.1365
Origin: FreshForex
