17 July 2024, EUR/USD
EURUSD:
On Tuesday, the EUR/USD exchange rate fluctuated around the 1.0900 mark as markets grappled with the prospect of a potential rate cut in September. Following the release of US retail sales data for June, the currency pair demonstrated further resilience. The market has fully priced in the start of the Federal Reserve's (Fed) rate cut cycle in September, with up to three quarter-point rate cuts expected over the course of the year. The European Central Bank (ECB) will hold its latest rate meeting on Thursday.
US retail sales in June remained at 0.0%, in line with expectations and down from a revised 0.3% in the previous month. The decline in retail sales has reinforced market expectations for a rate cut at the upcoming Federal Open Market Committee (FOMC) meeting on 18 September. The decline in US retail sales, coupled with the recent cooling of last week's Consumer Price Index (CPI) data, increases the likelihood of a rate cut in September. The CME's FedWatch tool indicates that markets now anticipate a near 100% probability of at least a quarter-point rate cut in September, with the potential for up to three additional cuts through 2024.
It is anticipated that the ECB will maintain the current interest rates on Thursday, as policymakers await further indications of improvement in the data following the initial quarter-point rate cut in June.
Trade recommendation: We follow the level of 1.0900, when fixing above it we take Buy positions, when rebounding we take Sell positions.
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