01 May 2024, EUR/USD
Events to watch out for today:
17:00 GMT+3. USD - ISM manufacturing index
21:00 GMT+3. USD - FOMC decision on the key interest rate
EURUSD:
EURUSD dipped below the 1.0670 level on Tuesday after an unexpected rise in U.S. wages reignited fears of stagnant inflation, lowering expectations of rate cuts and sending investors to safe-haven areas.
With European markets mostly closed on Wednesday due to Labor Day, investors will be focused on the Federal Reserve's (Fed) latest rate decision. Markets generally expect the Fed to keep rates on hold for now, but market participants will actively seek clearer policy guidance from the U.S. central bank as concerns over inflation and a sharp slowdown in U.S. economic growth keep market sentiment on hold.
U.S. home prices and business payroll costs showed acceleration on Tuesday, while consumer and business sentiment surveys simultaneously fell sharply. Investors have resigned themselves to the prospect of a stagnant economy and inflation that is too high, preventing the Federal Reserve from cutting rates at the faster pace investors expect from early 2024.
According to CME's FedWatch tool, the betting markets now see only one quarter-point Fed rate cut this year, with a 54% probability of no rate cut in September and only a 57% probability of a 25 basis point rate cut at the Fed's November meeting.
Trading recommendation: Trade mainly with buy orders at the price level of 1.0685. We consider sell orders at the price level of 1.0630.
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