EURUSD:
The euro opens the European session near 1.1600 after yesterday’s 1.3% collapse. The reason is the new US-EU trade agreement, which sets a 15% tariff on most European goods. The increased duty hits export competitiveness, lowers eurozone GDP growth forecasts, and stimulates capital flight into dollar assets, which increases pressure on the currency pair.
An additional “minus” for the euro remains the pause by the European Central Bank: on July 24, the regulator kept the deposit rate at 2% and, according to insiders, will raise the bar for the next easing. Goldman Sachs and BNP Paribas have already ruled out further rate cuts in 2025, which limits the ECB’s maneuvering room amid a slowing European economy.
The US, on the other hand, is keeping rates unchanged, with 10-year Treasury yields stuck at 4.34%. The market sees less than a 25% chance of the Fed easing policy at its July 30 meeting: PCE inflation remains at 2.7% y/y, and the labor market gives cause for caution. The yield differential is widening, strengthening the foundation for a further decline in EURUSD to 1.1500.
Trading recommendation: SELL 1.1600, SL 1.1630, TP 1.1545
Origin: FreshForex
