Fundamental Market Analysis for August 8, 2024 EURUSD
The Euro-dollar pair bounced back towards 1.0935, breaking a two-day losing streak during Asian trading on Thursday. A softer US dollar (USD) is providing some support to the major pair. Nevertheless, risk-off sentiment may limit EUR/USD gains amid escalating geopolitical risks. Later in the day, the weekly US initial jobless claims report will be released.
Last week's weak US jobs report for July sparked speculation of deeper interest rate cuts by the Federal Reserve (Fed) this year, which continue to undermine the US Dollar. Financial markets are convinced that the Fed will cut interest rates at its next meeting in September, increasing the rate cut bets by 50 basis points (bps) rather than 25 bps, to nearly 83%, according to the FedWatch tool.
On Wednesday, European Central Bank policymaker Olli Rehn said the ECB could continue cutting interest rates if there is confidence among policymakers that inflation will slow in the near term. The central bank left interest rates unchanged at its July meeting. ECB President Christine Lagarde said during a conference on the coast that any move in September remains an open question.
Meanwhile, rising geopolitical tensions in the Middle East could put pressure on risk assets such as the euro (EUR). The market turned cautious after CNN reported on Wednesday that Iran and its supporters are preparing for a potential retaliatory strike on Israel. According to the latest reports, the retaliation could be delayed until Thursday or Friday.
Trading recommendation: Trade predominantly with Buy orders from the current price level.
Last week's weak US jobs report for July sparked speculation of deeper interest rate cuts by the Federal Reserve (Fed) this year, which continue to undermine the US Dollar. Financial markets are convinced that the Fed will cut interest rates at its next meeting in September, increasing the rate cut bets by 50 basis points (bps) rather than 25 bps, to nearly 83%, according to the FedWatch tool.
On Wednesday, European Central Bank policymaker Olli Rehn said the ECB could continue cutting interest rates if there is confidence among policymakers that inflation will slow in the near term. The central bank left interest rates unchanged at its July meeting. ECB President Christine Lagarde said during a conference on the coast that any move in September remains an open question.
Meanwhile, rising geopolitical tensions in the Middle East could put pressure on risk assets such as the euro (EUR). The market turned cautious after CNN reported on Wednesday that Iran and its supporters are preparing for a potential retaliatory strike on Israel. According to the latest reports, the retaliation could be delayed until Thursday or Friday.
Trading recommendation: Trade predominantly with Buy orders from the current price level.
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