06 August 2024, EUR/USD
EURUSD:
On Monday, EURUSD strived higher and came close to 1.1000, but then fell back to 1.0950. Broad market expectations for a Federal Reserve (Fed) rate cut are well ahead of the curve, with investors hoping for an initial double Fed rate cut in September.
The economic calendar for the current trading week remains generally sparse, although European retail sales will be the last hurdle in the Fed's path before markets can fully settle down in anticipation of the September rate cut season. EU retail sales for the year ended June are expected to fall to 0.1% from May's 0.3% annualized rate.
According to CME's FedWatch tool, betting markets are now pointing to an 85% probability of a double 50 basis point Fed rate cut on September 18. This change in sentiment comes after mixed U.S. data on Friday and Monday. The economic data calendar for the rest of the trading week is relatively sparse, giving markets some respite and time to analyze their current positions.
The US Purchasing Managers' Composite Index (PMI) for July came in at 54.3, below expectations of 55.0. On the other hand, the ISM Services PMI for the same period rose to 51.4, exceeding expectations of 51.0 and returning to expansion territory above 50.0. Despite this, the ISM Services Prices Paid index for July rose to 57.0 from 56.3, exceeding the market's expected decline to 55.8, indicating that inflationary pressures at the business level are still present.
Trading recommendation: Trade mainly with buy orders at the price level of 1.1010. We consider sell orders at the price level of 1.0925.
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