EURUSD:
The euro is trading steadily thanks to a softer US dollar amid declining US Treasury yields and the fact that federal funds futures already reflect a high probability of a Fed rate cut in October. This reduces the premium for holding the dollar and supports the single currency. An additional tailwind comes from improved global risk appetite following Chinese data that beat the consensus.
Recent remarks from ECB officials suggest they are comfortable with current rates and see a diminishing likelihood of further cuts in the coming months. The euro area economy remains resilient while inflation moves closer to target, reducing the need for additional stimulus. For the euro, this means the near-term rate-expectations differential is not widening in favor of the dollar.
Overall, the balance of fundamental drivers tilts toward a gradual strengthening of EUR against USD, provided the external backdrop does not deteriorate sharply. The focus is on further comments from the Fed and ECB regarding the rate path and on assessing how US–China trade frictions may affect inflation prospects.
Trade recommendation: BUY 1.1665, SL 1.1645, TP 1.1720
Origin: FreshForex
