EUR/USD Monthly Forecast: September 2024

• As of this writing the EUR/USD is trading near the 1.10930 mark towards the end of August.
• The movement higher in the EUR/USD since the end of July has been solid; in fact it has been fast and strong.
• While the currency pair is trading off of lows achieved on Monday the 26^th of August when the EUR/USD flirted with the 1.12000 level, the upwards mobility can pointed to as being sustained.
• Financial institutions which have been leaning heavily into bullish perspectives since the end of the third week in July have likely been rewarded.

The U.S Federal Reserve has almost guaranteed that it will cut its Federal Funds Rate in September, and there seems to be an inclination via large players that a November cut is expected too.  The daily fast price changes have not been easy for day traders, and even financial institutions likely had their behavioral sentiment tested as reversals continued in early August. However, on the 5^th of August when many global financial markets expressed extreme nervousness, the EUR/USD held its ground and actually maintained some degree of strength as it stayed close to the 1.09000 ratio.

Nervous Sustained Highs in the EUR/USD in Second Week of August

From the 6^th until about the 13^th of August the EUR/USD maintained a rather tight price range, but did not show signs of a violent reversal as it hung onto the 1.09200 vicinity. And then on the 14^th through the 19^th of August the 1.10000 level was tested. Yes, a reversal lower occurred when the 1.10000 level was initially hit, but the ability to show support had risen to around the 1.09500 mark may have provided financial institutions with more confidence in the bullish trend. And this support level has not been tested since the 15^th of August.

On the 20^th of August the EUR/USD started to challenge 1.11000, price velocity was evident in the currency pair and day traders who were not prepared likely got hurt if they were not using proper risk management. When Jerome Powell started to talk at the Fed’s Jackson Hole Symposium the EUR/USD went from nearly 1.11000 to 1.11800 rapidly. The current value of the EUR/USD the past couple of days has shown a solid ability to remain above 1.10000.

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EUR/USD Looking Glass in September

Economic data from the E.U remains lackluster and the ECB will hold their monthly meeting one week before the U.S Fed in September. The ECB may feel the ability to cut its interest rate exists, but they might prove to be cautious. However, because it is widely known the Fed is going to cut by at least 0.25%, this should allow the ECB to be dovish too.

• The additional notion the U.S central bank will cut again in November is not guaranteed but is certainly being wagered upon by financial institutions.
• The current value of the EUR/USD has likely priced in a rate cut from the ECB and Fed in September.
• If these rate cuts prove to be true starting on the 12^th of September via the ECB, and then six days later by the Fed, this could sustain the higher price range the EUR/USD has accomplished and spur more buying.

EUR/USD Outlook for September 2024:

Speculative price range for EUR/USD is 1.10100 to 1.12400

Until the ECB announcement on the 12^th of September the EUR/USD may remain choppy. Some financial institutions may believe the buying has been too active. Thus, day traders may suspect this is a potential reason for the slight selloff which happened earlier today on the 29^th of August. However, if the EUR/USD continues to hold onto the top tier of its value range above 1.10000, this will indicate financial institutions may believe more upside is going to develop in the currency pair.

The EUR/USD has shown plenty of price velocity the past few weeks and speculators need to remain cautious. For the currency pair to produce another round of fast trading upwards more impetus will need to come via USD centric weakness. Speculators may not get the fast movements they encountered in August and the currency pair until the late in the second week of September. If the 1.11000 mark is penetrated and sustained in early September this may be a signal some financial institutions believe highs from early July 2023 should be challenged.

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