EURUSD:
The euro is holding near 1.1600 on Wednesday, while the backdrop in the euro area remains relatively stable: inflation is close to target, expectations for ECB rates are tilted toward a pause through year-end, and sovereign yields are fluctuating without a clear trend. Against this backdrop, pressure on the euro from any aggressive tightening by the ECB is not in sight, which reduces the risk of a sharp rise in borrowing costs for the real economy.
For the U.S. dollar, the key driver remains the upcoming Fed meeting: markets assign a high probability to a rate cut at the end of October, which caps USD upside and supports interest in the single currency. An additional factor is the “information vacuum” in U.S. macro releases amid administrative disruptions, which curbs dollar buying and heightens sensitivity to remarks from Fed officials.
Finally, overall market risk appetite remains mixed: bursts of volatility in commodity markets have not morphed into sustained demand for U.S. safe-haven assets. Taken together, this sets a moderately positive fundamental bias for EURUSD provided the ECB stays patient and the Fed does move to ease policy.
Trade recommendation: BUY 1.1605, SL 1.1575, TP 1.1655
Origin: FreshForex
