Euro Falls Amid Rising Speculation of ECB Rate Cuts

Fundamental Analysis

* ECB Cut Watch: The euro continued to decline against the dollar as expectations grew that the European Central Bank (ECB) would cut rates at its September 12 meeting. The ECB is expected to unveil economic forecasts, likely downgrading growth and inflation estimates. Money markets are pricing in rate cuts of 50 to 75 basis points by the end of the year, with many analysts predicting a 25-basis-point cut. Adding to the pressure on the euro, demand for the dollar has increased after recent U.S. jobs data, weakening the case for a Federal Reserve rate cut.

Technical Analysis

* Technical Breakout: EURUSD was traded lower while currently testing the support level 1.1025. MACD which illustrate bearish momentum signal with the recent formation of death cross suggest the pair to likely further extend its losses after it breaks below the support level.

* Resistance and Support: If the bearish momentum persists, there’s a strong likelihood that the price will potentially head towards 1.09450 after it breaches below the level 1.10250. Conversely, a potential reversal is also to be expected and the price could head back towards the level 1.11100.

Potential Risks

Looking ahead, investors will turn their attention to key economic data, with Germany’s inflation figures scheduled for Tuesday and the Eurozone’s industrial production data coming on Friday. Additionally, markets anticipate heightened volatility as the U.S. Consumer Price Index (CPI) for August is set to be released on Wednesday.

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Monitoring

Stay updated on US and Eurozone data, central bank updates and any shifts in the US Dollar’s strength by following PU Xtrader’s financial news page.

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