08 February 2024, EUR/USD
Event to watch out for today:
15:30 EET. USD - Number of initial applications for unemployment benefits / FOMC member Thomas Barkin to give a speech
EURUSD:
EUR-USD is building on this week's recovery from the 1.0720-1.0725 area, the lowest level in almost three months, and gaining positive momentum for the third day in a row. This momentum is lifting spot prices to a fresh weekly high, closer to 1.0800 during the Asian session, and is supported by a moderate weakening of the US dollar.
A number of influential Federal Reserve (Fed) officials have recently tempered market expectations of an imminent interest rate cut, which continues to support US Treasury yields. Nevertheless, markets are still pricing in the likelihood of five rate cuts over the Fed's seven remaining meetings this year. This, along with the overall positive risk sentiment, is undermining the safe-haven dollar, which, is seen as a key factor contributing to the euro-dollar pairing.
"Bears" on the dollar are refraining from aggressive bets and prefer to wait for further signals on the likely timing and pace of rate cuts in 2024. This, as well as expectations that the European Central Bank (ECB) may start cutting interest rates as early as April amid falling inflation in the Eurozone, may limit the EUR/USD growth. Therefore, it would be prudent to wait for strong follow-through buying before confirming that spot prices have bottomed.
Spot prices could target a return to the round figure of 1.0900 and extend the positive move further towards the next relevant hurdle around 1.0920-1.0925. A sustained strengthening above this area should open the way for further gains and lift EUR/USD towards the psychological 1.1000 mark.
Trade recommendation: Trade buy orders when the price level reaches 1.0800
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