Technical factors are putting a lot of pressure on buyers | 16 July 2024

Event to pay attention to today:

15:30 GMT+3. USD - Retail Sales

EURUSD:

The EUR/USD exchange rate failed to maintain its recent bullish momentum, with a sharp pullback occurring after a brief surge above 1.0900 at the start of the new trading week. Price movement has since remained within the upper boundary of the descending price channel. In light of the upcoming speeches from key policymakers at the Fed on Monday, traders are carefully considering their stance on the US dollar.

On Monday, Federal Reserve Chairman Jerome Powell acknowledged recent progress on inflation. This was followed by a statement from San Francisco Fed President Mary Daly, which was of lesser importance. Both key Federal Reserve policymakers emphasised that there are no fixed guidelines regarding the timing of a potential interest rate cut, with decisions to be made on a meeting-by-meeting basis.

CME's FedWatch tool indicates that the market anticipates a rate cut in September. The probability of a 25-basis-point cut in the federal funds rate at the Federal Open Market Committee (FOMC) meeting on 18 September is now 100%.

The release of U.S. retail sales data on Tuesday will complete a recent series of significant economic reports. It is anticipated that US economic activity will continue to decelerate, with US retail sales in June projected to remain unchanged at 0.0% month-on-month.

Euro traders will be monitoring the outcome of the latest European Central Bank (ECB) meeting on Thursday with great interest. A further rate cut is anticipated following the quarter-point reduction implemented in June. However, this is not expected to occur until September at the earliest, with a third rate cut scheduled for December. As Pimco executive vice president and portfolio manager Constantin Veit observed, the ECB has indicated a preference for making interest rate decisions at scheduled meetings, specifically in September and December, rather than in July, October, or January.

Trade recommendation: Trading predominantly Buy orders from the current price level.

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