- The end of July will come to a roaring end for the EUR/USD and other major currency pairs.
- The U.S Federal Reserve will deliver its FOMC decisions publicly later today and open the doors for more volatility within the EUR/USD.
- The currency pair began July within lower depths and did accomplish a climb upwards hitting an apex of nearly 1.09485 on the 17th of July.
- However, since hitting this value, which had last been seen in the third week of March, the EUR/USD started to ebb lower.
As of this writing the EUR/USD is near the 1.08195 mark and showing cautious behavior as financial institutions are clearly waiting for the Fed’s rhetoric today. The Fed will not cut its Federal Funds Rate today, this because it has not signaled an interest rate cut to the markets yet. And this is important, the Fed likes to telegraph what its plans are for the broad markets so there are no surprises. This makes the U.S Federal Reserve rather reactive when perceived by analysts who like to look ahead, which is required by their jobs.
Middling Price Range in EUR/USD Likely to Disappear
However, today’s FOMC Statement should contain the promise of at least one rate cut in September and perhaps another one to come in November. The EUR/USD will react accordingly to the pronouncements from the U.S central bank and speculators can be assured volatility will hit later today and last into tomorrow as August begins.
The immediate reaction in the EUR/USD will be that the current middling price realm in which the currency pair is now tracking per a one month chart will disappear. The question is which direction the EUR/USD will trend, and because of the highs achieved in the middle of July, it appears sentiment may lead the currency pair higher. But for this to happen the U.S Fed will have to signal that it will consider a rate cut in September, and one in November. U.S economic data has been weaker in many regards the past month; inflation has shown signs of coming under control. Will the Fed confirm these economic dynamics in their FOMC Statement later today?
Support and Resistance Levels for the EUR/USD and Sentiment
As of now the EUR/USD appears to be almost comfortably above the 1.08000 level and this is psychologically important for the currency pair and financial institutions. The ability to trade near the 1.08200 mark may look like an oversold level to many speculators right now, but financial institutions will remain cautious until they are given some optimistic signs by the U.S Fed regarding Federal Funds Rate cuts to come.
- Also, E.U economic data remains lackluster as illustrated by struggling Gross Domestic Product data yesterday.
- The ECB is likely also waiting on the Fed to demonstrate its wishes to cut interest rates before it too sounds overly dovish again.
- The 1.08000 to 1.09000 is a logical playing ground for the EUR/USD, but if the Fed sounds more dovish than anticipated later today, resistance levels could be tested quickly and buying action could ramps upwards.
Top Forex Brokers
EUR/USD Outlook for August 2024:
Speculative price range for EUR/USD is 1.07890 to 1.10450
Traders should not be overly aggressive in the EUR/USD. If the currency pair responds with upwards momentum to start August, this could provide the currency pair with the capability to create a higher price realm and test waters that it swam in March and also in the middle of July. The EUR/USD has not fallen much from its highs, but remains near dangerous support levels too which highlight that caution remains part of behavioral sentiment.
The currency pair is close enough to highs that suggest financial institutions believe the EUR/USD should be stronger, but they need solid impetus to commit to the upwards values. If the 1.09000 level is toppled and sustained in early August trading, this could be a signal that the currency pair could flirt with higher prices in the coming weeks. Large moves downward appear to be potentially less dangerous than moves higher, or at least choppy conditions prevailing in which the higher realms of the EUR/USD’s mid-term perspective are tested.
Ready to trade our monthly forecast? We’ve made a list of the best European brokers to trade with worth using.