EUR/USD lost control of the 1.0850 level | 30 July 2024

Event to pay attention to today:

12:00 GMT+3. EUR - European Union Gross Domestic Product (GDP) q/q

EURUSD:

The EUR/USD pair has lost control of its short-term bullish recovery, testing fresh two-week lows near 1.0800, as momentum from the pair is fading ahead of the release of new EU gross domestic product (GDP) data. The Federal Reserve (Fed) is scheduled to hold its latest rate meeting on Wednesday, while another round of US Non-Farm Payrolls (NFP) data is scheduled for Friday.

A number of European economic indicators are scheduled for release on Tuesday, including German and EU GDP data during the European market session. The latest estimates indicate a decline in German second quarter GDP, with a projected drop from 0.2% to 0.1%. Similarly, EU GDP growth is expected to increase to 0.6% year-on-year, up from the previous reading of 0.4%. However, the second quarter figure is anticipated to contract to 0.2% from the previous estimate of 0.3%.

The preliminary Harmonised Index of European Consumer Prices (HICP) is scheduled for release on Wednesday. The latest forecast indicates that HICP inflation is set to decline to 2.8% year-on-year, down from the previous reading of 2.9%. Subsequently, global markets will focus on the latest data from the Fed.

Investors will be monitoring the upcoming US Federal Reserve meeting on Wednesday, with an eye to signs that the Fed is preparing for a widely expected rate cut at the next Federal Open Market Committee (FOMC) meeting in September. The market is generally anticipating a rate cut of at least 0.25% on 18 September. CME's FedWatch tool indicates a 90% probability of a 25 basis point rate cut and a 10% probability of a larger cut.

Furthermore, on Friday, the US Non-Farm Payrolls (NFP) data will be released, which is an important factor in the Fed's employment criteria. Investors will be monitoring this data closely in anticipation of further indications of a slowdown in employment growth, which could prompt the Fed to initiate a new rate-cutting cycle in September. On Wednesday, the ADP Employment Change data for July will be released, which will help to forecast the NFP employment report due on Friday. However, this forecast is somewhat unreliable due to its erratic accuracy.

Trade recommendation: We follow the level of 1.0800, when fixing above it we take Buy positions, when rebounding we take Sell positions.

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