EUR/USD rebounds to test key level
Along with the other dollar pairs, the EUR/USD bounced back today after Thursday's sell-off. But this popular currency pair was testing a key resistance area, around 1.1030 to 1.1050 area (old support) - see chart. Will the sellers step back in from here and push rates down, or will the bulls reclaim this level?
There’s about 2 months to go until the Fed meets again. This means a lot can change in the interim in terms of data. Inflation is obviously in focus. But the Fed will also keep an eye on other macro indicators in determining whether to hike further.
Earlier today, US personal income printed +0.3% vs. +0.5% expected, while personal spending was up 0.5%, more than 0.4% expected. Meanwhile the PCE Core Deflator came in at 4.1% y/y vs. 4.2% expected.
Next week, the focus will be on the ISM manufacturing data (given the weakness we have seen in the sector) ahead of the official jobs report on Friday, in as far as US data is concerned.
The EUR/USD's bounce comes after the US dollar strengthened against most currencies on Thursday, following a dovish ECB meeting and upbeat macroeconomic data from the world’s largest economy, where GDP expanded 2.4% in the second quarter, more than 1.8% expected. We also had better-than-expected US jobless claims data.
Looking at the EUR/USD's price action, the onus was now on the bulls to show up as they have failed to defend some key levels earlier this week. Unless we go back above Thursday’s high now, to suggest the selling was a big trap for the bears, the path of least resistance remains to the downside.
The single currency fell sharply on Thursday after the ECB signalled that a pause in interest rate hikes could come as soon as September, which took the markets by a bit of surprise.
German CPI for July was expected to cool to 6.2% YoY, down from 6.4%. And it came in bang in line with the expectations. With price pressures cooling, this could fuel bets that the ECB won’t hike in September.
So, the EUR/USD might come under renewed pressure later in the day, or more likely, early next week.
By Fawad Razaqzada, market analyst for FOREX.com
There’s about 2 months to go until the Fed meets again. This means a lot can change in the interim in terms of data. Inflation is obviously in focus. But the Fed will also keep an eye on other macro indicators in determining whether to hike further.
Earlier today, US personal income printed +0.3% vs. +0.5% expected, while personal spending was up 0.5%, more than 0.4% expected. Meanwhile the PCE Core Deflator came in at 4.1% y/y vs. 4.2% expected.
Next week, the focus will be on the ISM manufacturing data (given the weakness we have seen in the sector) ahead of the official jobs report on Friday, in as far as US data is concerned.
The EUR/USD's bounce comes after the US dollar strengthened against most currencies on Thursday, following a dovish ECB meeting and upbeat macroeconomic data from the world’s largest economy, where GDP expanded 2.4% in the second quarter, more than 1.8% expected. We also had better-than-expected US jobless claims data.
Looking at the EUR/USD's price action, the onus was now on the bulls to show up as they have failed to defend some key levels earlier this week. Unless we go back above Thursday’s high now, to suggest the selling was a big trap for the bears, the path of least resistance remains to the downside.
The single currency fell sharply on Thursday after the ECB signalled that a pause in interest rate hikes could come as soon as September, which took the markets by a bit of surprise.
German CPI for July was expected to cool to 6.2% YoY, down from 6.4%. And it came in bang in line with the expectations. With price pressures cooling, this could fuel bets that the ECB won’t hike in September.
So, the EUR/USD might come under renewed pressure later in the day, or more likely, early next week.
By Fawad Razaqzada, market analyst for FOREX.com
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