EURUSD Pushing Higher
EURUSD is breaking out today, helped by a heavily weaker US Dollar and less-dovish ECB expectations. Fiscal uncertainty in the US as well as higher near-term Fed easing expectations are pushing USD down lower here. While Fed easing expectations are rising, the market has been scaling back its ECB easing expectations in line with the bank’s own guidance that its easing cycle is nearly done.
EZ Inflation Rises Again
Today, eurozone inflation was seen edging back up to the 2% from the prior month’s 1.9% level. The data, while not shocking, simply reinforces the new backdrop with traders dampening down their ECB rate-cut forecasts over the remainder of the year. If inflation continues to rise above target, this could see traders unwinding rate cut forecasts altogether, creating deeper support for EUR near-term.
ECB’s Sintra Panel
Looking ahead today, focus is on the ECB's Sintra conference in Portugal, where central bank leaders from the US, Eurozone, UK, Japan, and Korea will participate in a joint panel discussion at 15:30 CET. The key focus will of course be on Chair Powell and whether he adjusts his tone on persistently high inflation which, if seen, will be negative for USD. On the ECB front, the market is anticipating one more .25% rate cut to 1.75% in December with a very low expectation that Lagarde will cause any disruption to this view today. As such, EURUSD should remain supported through the event.
Technical Views
EURUSD
The rally in EURUSD has seen the market breaking out above the 1.1699 level and with momentum studies bullish, focus is on a continuation higher here. 1.1899 will be the next hurdle for bulls with the bullish outlook remaining in place while price holds above the 1.1699 level.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.