EUR/USD below the psychological mark | 15 July 2024

Event to pay attention to today:

19:30 GMT+3. USD - Federal Reserve Chairman Jerome Powell Speaks

EURUSD:

In the early Asian session on Monday, the EUR/USD is attracting sellers around 1.0885. The major currency pair is declining due to risk aversion, which is prompting investors to seek out the US dollar (USD).

The Producer Price Index (PPI) for US wholesale inflation rose to 2.6% year-on-year in June, up from a revised 2.4% in the previous reading. This figure exceeded the consensus of 2.3%. The core PPI increased by 3.0% year-on-year, exceeding the projected 2.5%. However, market attention remains focused on the recent rise in the consumer price index (CPI), which has heightened expectations of a rate cut.

Furthermore, the University of Michigan's consumer sentiment index declined to 66.0 in July from 68.2 in June, reaching its lowest point in seven months and falling short of the anticipated increase to 68.5. The anticipated rate of inflation for the consumer market over the next five years has seen a slight decline, from 3.0% in the previous reading to 2.9% in July.

Fitch analysts have suggested that the Federal Open Market Committee (FOMC) may consider cutting interest rates at an earlier date than previously anticipated, citing concerns about the labour market as a potential factor. The Fed will be monitoring the labour market closely for any signs of weakness in the future.

Political developments in the United States over the weekend contributed to the strengthening of the US dollar, which is regarded as a safe-haven currency, and created a challenging environment for the EUR/USD currency pair. On Saturday, former President Donald Trump was injured in an assassination attempt during a rally in Butler, Pennsylvania. The incident resulted in the death of one spectator, two others sustaining serious injuries, and images circulated on social media showing Trump with blood streaming from his ear.

In terms of the euro, officials anticipate that price pressures will remain at current levels throughout the year, which reduces expectations for further rate cuts by the European Central Bank (ECB). This month, ECB President Christine Lagarde reiterated her cautious approach, stating, "A strong labour market allows us to gather new information, but we must also remember that the outlook for growth remains uncertain."

Trade recommendation: Trading predominantly Buy orders from the current price level.

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