The decline in US inflation rates and the calming of expectations regarding the future of raising interest rates gave investors the opportunity to take risks and abandon the US dollar. Thus, this allowed the price of the currency pair EUR/USD to rebound upward with gains that reached the 1.0912 resistance level. Nearby, its highest level in two and a half months, and closed the week’s trading on the upside. About those gains, this performance will coincide with a relatively calm trading week in which all focus will be on announcing the content of the minutes of the last meeting of the US Central Bank.
Recently, a report showed that US consumer inflation slowed more than expected last month, raising hopes that the US Federal Reserve would be able to achieve a delicate balance. Moreover, subsequent readings raised hopes for a rise after indicating that inflation and the overall economy may slow down. Recently, traders are trying to bet on when the Federal Reserve could actually start cutting US interest rates, which could stimulate prices for investments and provide oxygen to the financial system. For its part, the Federal Reserve said that it plans to keep interest rates high for a period to ensure the final victory in the battle against inflation, but traders believe that the cuts may begin as early as the summer of 2024.
Furthermore, one potential concern is that inflation has declined in recent weeks. As, Oil prices fell amid concerns about the mismatch between the abundant supply of crude and the lack of demand.
Euro price expectations in the coming days:
The EUR/USD exchange rate is starting to lose upward momentum, according to new analysis from Commerzbank. In this regard, the bank’s expert, Michael Pfister, says in a new note that indicators indicate that the euro’s momentum against the dollar EUR/USD is “slowly running out at the 1.09 level.” The analyst adds: “At EUR/USD levels just below 1.09, things became very hot for the market and gains were restored. The market has already considered this level to be an initial hurdle.”
According to market trading, the value of the euro rose against the dollar EUR/USD after US inflation data fell below consensus, which prompted markets to “price in” more interest rate increases at the Federal Reserve and interest rate cuts in 2024. Subsequent data was mixed, but not Able to significantly shift the trend in Favor of the US dollar. Commerzbank's Forex analysis team believes that a move higher in EUR/USD is justified, although the move now looks relatively extended in the near term. Also, “A break above 1.09 would likely require a clearer signal that inflation is returning to target levels or that a recession is looming in the United States,” the bank analyst added. Or both. Finally, “In the absence of any new information of this kind – the US data is top notch – exchange rates are likely to stagnate.”
EUR/USD Today Expectations and Analysis
According to the performance on the daily chart below, the general downward trend of the currency pair EUR/USD is broken, and the direction may change if the bulls move towards the psychological resistance level of 1.1000. This requires more investors to take risks and abandon the dollar as a safe haven. Consequently, we expect a quiet trading session considering the American holiday, which affects liquidity and investors’ appetite for making deals. On the other hand, over the same period, the return of the EUR/USD price towards the support level of 1.0750 will be important for the bears to return to control and the hopes of the current upward rebound to evaporate.
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