EURUSD:
The euro is yielding to the dollar: market participants are scaling back expectations of imminent Fed rate cuts, and the Dollar Index is renewing three-month highs. With more cautious signals from U.S. monetary authorities, demand for the dollar remains firm, while the euro is under pressure due to slowing industrial activity and moderate inflation prospects in the euro area. The daily calendar is thin, so the dynamics are driven mainly by U.S. rate expectations and the behavior of Treasury yields.
In addition, it is noted that the pair is trading near the lows of recent months and recovery attempts remain sluggish: the market lacks new positive impulses from Europe, while the dollar is supported by the Fed’s rhetoric and resilient U.S. labor market figures. This increases the asymmetry of risks in favor of the dollar amid a neutral news background for the current day.
Overall, the fundamental picture favors further downside in EURUSD: the U.S. benefits from higher real yields and a cautious regulator, while the ECB, judging by recent decisions and communications, is moving toward a prolonged period of accommodative conditions and monitoring inflation. In the absence of strong European drivers, the euro remains vulnerable to new waves of dollar demand.
Trading recommendation: SELL 1.1515, SL 1.1535, TP 1.1455
Origin: FreshForex
