EURUSD:
The euro is supported by a sharp strengthening of expectations for a Fed rate cut as early as September and a subsequent easing cycle in 2025–2026. The Federal Reserve’s rhetoric has turned softer, with officials highlighting risks to the labor market and a readiness to respond to cooling activity. This pushes U.S. Treasury yields lower and weakens the dollar, which is fundamentally supportive for EURUSD over the current horizon.
On the European side the picture is mixed: the ECB resumed its easing cycle in June but stresses data dependency, while weak growth risks in the euro area persist. At the same time, disinflation and a calmer energy backdrop reduce pressure on consumers, and a widening in real-rate differentials as U.S. yields slip favors the euro. Political uncertainty in the U.S. further limits demand for the dollar as a safe haven.
In the near term, the balance of factors points to further normalization higher in EURUSD as markets adapt to the prospect of a Fed cut and a softer dollar amid easier financial conditions. Focus is on fresh U.S. inflation prints and FOMC communication: a dovish tilt, absent negative macro surprises, would be a catalyst for testing higher levels in the pair.
Trading recommendation: BUY 1.1705, SL 1.1645, TP 1.1760
Origin: FreshForex
