13 August 2024, EUR/USD
Event to watch out for today:
12:00 GMT+3. EUR - Business Sentiment Index from ZEW Institute
15:30 GMT+3. USD - Producer Price Index
EURUSD:
EUR/USD is trading in positive territory around 1.0940 during the Asian session on Tuesday. The major pair is showing modest gains amid US dollar consolidation. Later on Tuesday, the US Producer Price Index (PPI) publication will be in the spotlight. The core PPI is forecast to fall to 0.1% month-on-month in July from 0.2% in the previous reading, while the core PPI is projected to fall to 2.7% year-on-year in July from 3.0% in June.
Markets fully priced in the likelihood of a rate cut of at least 25 basis points (bps) in September and a high probability that the Fed will cut rates by a full percentage point before the end of the year. Morgan Stanley analysts said on Monday they forecast a 25 basis points (bps) rate cut by the Federal Reserve (Fed) in September, maintaining their stance despite the current downturn in global markets. Rising bets for a Fed rate cut are likely to put pressure on the US Dollar (USD) and create a tailwind for EUR/USD at the moment.
Overseas, Germany's ZEW Expectations Index is expected to come in at 31.8 in August vs. 41.8 in July, and the current estimate of -75.0 in August vs. -68.9 previously. Weaker than expected data will contribute to the negative outlook for the economy and could keep the European Central Bank (ECB) in easing mode as the September 12 rate cut is already a foregone conclusion.
Trading recommendation: Trade predominantly with Buy orders from the current price level.
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