EURUSD:
The euro remains under pressure after a run of weak euro-area data: July’s final composite PMI slipped to 49.8, putting overall business activity back in contraction for the first time in four months. Core inflation also eased to 2.5 percent y/y, reinforcing expectations that the ECB will lean toward further policy easing this autumn.
Conversely, the dollar is supported by the wide interest-rate differential: at its July meeting the Federal Reserve held the target range at 5.25–5.50 percent, and traders have pared back bets on a December cut following Friday’s unexpectedly strong wage growth in the NFP report.
Dollar strength is also underpinned by trade dynamics: the US trade deficit narrowed to USD 62.2 billion, while the eurozone swung back to surplus; however, slower export growth amid tepid global demand limits support for the single currency.
Trading Recommendation: SELL 1.1575, SL 1.1595, TP 1.1475
Origin: FreshForex
