24 June 2024, EUR/USD
EURUSD:
The Euro-dollar pair remains lower for the third consecutive day on Monday, trading around 1.0690-1.0685 in the Asian session, just above the lowest level since early May. The common currency continues to be dragged down by uncertainty over the outcome of the snap election in France, which has fueled fears that the new government will worsen the financial situation in the Eurozone's second-largest economy. In addition, flash PMI indices released on Friday showed that business activity growth in the Eurozone slowed sharply in June. This, as well as some subsequent US Dollar (USD) buying, proved to be key factors putting downward pressure on EUR/USD.
The US Dollar Index (DXY), which tracks the dollar against a basket of currencies, rose to its highest level since May 9 on the back of Friday's PMI data, which showed that US business activity rose to a 26-month high in June. The data confirms the Federal Reserve's (Fed) patient approach, although signs of weakening inflationary pressures have raised the prospect of a rate cut in September. This could deter dollar bulls from aggressive bets and help limit further EUR/USD declines.
Traders may also prefer to wait for Friday's release of US Personal Consumption Expenditures (PCE) price index data to get an indication of how the Fed will cut the rate. This, in turn, will play a key role in influencing US Dollar price action in the near term and will provide meaningful momentum to the EURUSD. Traders are now waiting for the release of German IFO business climate data and speeches of influential FOMC members to take advantage of short-term opportunities in the absence of any significant macroeconomic releases from the US.
Trading recommendation: Watch the level of 1.0700, and if the level is fixed above, take Buy positions.
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