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EUR/USD Surges to 4-Month High as Fed Rate Cut Expectations Strengthen, US Dollar Tumbles
Market Drivers and Outlook
Despite the robust retail sales figures, market sentiment remains firmly focused on the Fed's expected shift towards an easing monetary policy. Recent commentary from Fed officials, including Governor Adriana Kugler, has bolstered this outlook, with a 100% probability of a September rate cut now priced in.
Investors are eagerly awaiting Thursday's European Central Bank (ECB) monetary policy meeting, where interest rates are expected to remain unchanged. However, the focus will be on the ECB's commentary regarding the future path of interest rates and the timing of potential cuts.
Meanwhile, concerns over the German economic outlook have intensified, following a sharp decline in the ZEW Survey – Economic Sentiment for July. This highlights the challenges facing the Eurozone's largest economy amidst weakening demand from both domestic and overseas markets.
EUR/USD Technical Analysis: Bullish Breakout Continues
The EUR/USD pair has decisively broken out of a Symmetrical Triangle formation on the daily timeframe, signaling a continuation of the bullish trend. The pair is now targeting the March 8th high near 1.0980, with further upside potential.
The 20-day Exponential Moving Average (EMA) continues to provide support, while the 14-day Relative Strength Index (RSI) has entered the bullish range, confirming the strong upward momentum.
Key Points:
- EUR/USD hits four-month high on Fed rate cut expectations.
- US Retail Sales data fails to deter rate cut bets.
- ECB meeting and commentary in focus.
- German economic concerns weigh on Eurozone outlook.
- Technical analysis confirms bullish breakout and upside potential.