EURUSD extends into swing territory
As with GBP/USD, EUR/USD has reached fresh highs as European traders look to exit the week. The move takes the price towards the June 2024 high at 1.0915 and a longer swing area between 1.0909 and 1.0918. A break of this area would be required to increase the bullish bias.
There was a push this week toward a Fed rate cut in September despite today’s PPI decline. The CPI was lower. The Shelter index may have started to decline. The University of Michigan index remained near its lows today after last month’s sharp decline.
Initial jobless claims were lower, but the holiday season in the US makes it difficult to predict the seasons. The Fed chairman emphasized in his testimony that it is not just about inflation now. To have a soft landing, the focus must also be on employment, which he sees as slowing and not contributing to inflationary pressures. That means the market believes September is a good time to start cutting rates. The odds of a December rate cut are also becoming increasingly high.
In the Eurozone, the ECB cut interest rates in June, but they are also looking to September. They may argue for trading in bullish and bearish ranges. In that case, traders may look to rely on this area. However, if the price moves above this level, the bias is still in favor of the buyers at this point. So be careful.