EURUSD:
The euro is under pressure ahead of the release of July U.S. inflation data, which may confirm that the Federal Reserve is in no hurry to cut rates. The year-over-year CPI forecast hovers around 3.3%, well above the target level. This supports the 2-year U.S. Treasury yield around 4.90% and increases the dollar’s appeal.
Europe’s picture looks weaker: Germany’s industrial production has fallen for the fifth straight month, and the ZEW sentiment index remains in negative territory. Meanwhile, the ECB continues to signal a pause after the June rate cut, wary of deepening recession. The widening U.S.-Germany yield differential historically correlates with EURUSD downside.
Additional pressure comes from lower energy prices — European gas has fallen 12% since the start of the month thanks to well-filled storage. Cheaper energy imports reduce trade turnover and widen the eurozone current account deficit, which is also unfavorable for the euro.
Trade recommendation: SELL 1.1615, SL 1.1635, TP 1.1500
Origin: FreshForex
