Euro attempts to recover | 16 August 2024

Event to watch out for today:

15:30 GMT+3. USD - Building Permits

EURUSD:

The Euro-dollar pair is building on the previous day's late bounce from the 1.0950 area and gaining positive momentum during the Asian session on Friday. However, spot prices are unable to capitalize on this rise and are currently trading in the 1.0975-1.0980 area, up just over 0.05% for the day.

The combination of factors is encouraging fresh selling in the US Dollar (USD), which in turn is providing some support to the EUR/USD pair. Despite the encouraging macroeconomic data released on Thursday, investors seem convinced that the Federal Reserve (Fed) will begin its policy easing cycle in September and have already fully priced in the possibility of a 25 basis point rate cut. This, in turn, is causing a slight pullback in US Treasury yields and putting some downward pressure on the dollar.

In addition, the prevailing “risk-on” sentiment, expressed in a positive tone in global stock markets, is another factor undermining demand for the safe-haven greenback. Meanwhile, the risk of expanding conflict in the Middle East could be a tailwind for the dollar. In addition, expectations that the European Central Bank (ECB) will cut rates again amid falling Eurozone inflation seem to be holding back EUR/USD.

Nevertheless, spot prices continue to show modest weekly gains. Moreover, the emergence of some buying near the 1.0950 horizontal resistance, which turned into support on Thursday, calls for some caution before positioning for deeper losses. Traders are currently awaiting the release of US macroeconomic data - construction data, housing permits and the preliminary Michigan consumer sentiment index - looking for short-term opportunities later in the early North American session.

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

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