EURUSD:
The euro is strengthening against the dollar as the U.S. currency softens on risks of a federal government shutdown and rising expectations that monetary policy in the United States could ease further by year-end. Markets are contemplating additional steps to support the economy, which reduces the dollar’s appeal and supports demand for currencies with a more neutral risk profile, including the euro. An additional tailwind is the acceleration in gold prices as a sign of heightened demand for safe assets.
In Europe, attention is centered on preliminary inflation readings in key euro area countries, which matter for the ECB’s policy path. With neutral signals from the ECB, the short-term balance of risks tilts toward the euro due to external drivers: uncertainty around the U.S. budget process and the potential delay of some statistical reports that traditionally support the dollar.
Stabilizing U.S. Treasury yields alongside a growing probability of easier Federal Reserve policy keeps pressure on the dollar. Against this backdrop, EURUSD holds above 1.1700, reflecting a reallocation of flows in favor of the euro as the premium for dollar liquidity ebbs.
Trading recommendation: BUY 1.1725, SL 1.1695, TP 1.1795
Origin: FreshForex
