EURUSD:
EUR/USD holds near 1.18 amid a mix of more cautious Federal Reserve signals and signs of a gradual recovery in euro area business activity. Markets are pricing the Fed’s first step toward policy easing in a year alongside messages about proceeding carefully, which reduces the dollar’s appeal while Treasury yields remain broadly steady. The euro is supported by fresh flash PMIs: the composite index for the region improved, even if the picture remains uneven across countries. At the same time, the ECB kept rates unchanged at its September meeting and indicated that the pace of any further changes will depend on the inflation path and domestic demand.
In the United States, “fast” indicators point to slower business momentum, while price pressures—still above target—look more contained. This strengthens expectations for a moderate Fed rate-cut cycle by year-end. In this setup, the balance of yield differentials and policy expectations tilts slightly toward the euro, especially if incoming U.S. data continue to confirm cooling growth.
Key risks for EUR/USD buyers are U.S. inflation and employment releases: any upside surprises could revive demand for the dollar. On the euro side, vulnerabilities include German industrial weakness and stagnating new orders. Nevertheless, for the current week the balance of factors looks neutral-to-positive for the pair, supporting tactical buys from the 1.18 area.
Trading recommendation: BUY 1.1805, SL 1.1775, TP 1.1860
Origin: FreshForex
