Euro expects momentum during the week | 09 September 2024

EURUSD:

EUR/USD is trying to recover the previous session's losses, trading near 1.1080 during Monday's Asian session. However, EUR/USD's gains may be limited as the latest Eurozone inflation data reinforced expectations of a rate cut by the European Central Bank (ECB) at its upcoming policy meeting on Thursday.

With core inflation approaching 2% and long-term inflation forecasts remaining around the same level, there is ample reason for the ECB to further ease monetary policy. In addition, mixed gross domestic product (GDP) data from the Eurozone last week reinforced expectations of a potential ECB rate cut.

On Friday, economic data from the US added to uncertainty over the likelihood of an aggressive interest rate cut by the Federal Reserve (Fed) at its September meeting. The US Bureau of Labour Statistics (BLS) reported that non-farm payrolls (NFP) increased by 142,000 jobs in August, below the forecast of 160,000 but better than the downwardly revised July figure of 89,000. Meanwhile, the unemployment rate fell to 4.2%, as expected, down from 4.3% the previous month.

According to the CME FedWatch Tool, markets fully expect the Federal Reserve to cut rates by at least 25 basis points (bps) at its September meeting. The probability of a 50 bps rate cut fell slightly to 29.0% from 30.0% a week ago.

Federal Reserve Bank of Chicago (Fed) President Austan Goolsbee noted on Friday that Fed officials are beginning to agree with the broad market's view that a rate adjustment by the U.S. central bank is inevitable, according to CNBC. FXStreet's FedTracker system, which uses a proprietary artificial intelligence model to rate Fed officials' speeches on a scale of 0 to 10, rated Goolsbee's comments as dovish, giving them a 3.2 rating.

Trading recommendation: Watch the level of 1.1115, if the level is fixed above, we take Buy positions, if the level rebounds, we take Sell positions.

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