EURUSD – Up
EURUSD:
The Euro-dollar pair consolidated near 1.0895 in the early Asian session on Monday. The decline in the US dollar (USD) is providing some support to the major pair. Rising expectations for a Federal Reserve (Fed) rate cut in September and a volatile US labor market are weighing on the USD. According to CME FedWatch Tool, financial markets now estimate the probability of a rate change at the July meeting to be less than 5%, with a near-term rate cut expected in September. New York FRB President John Williams said on Friday that an interest rate cut may be warranted in the coming months, but not at the July meeting.
As for the euro, as expected, the European Central Bank’s (ECB) interest rate decision was unchanged. ECB President Christine Lagarde refrained from making a decision to cut rates. Lagarde said that although inflation in the eurozone is on a “disinflationary path”, the ECB will still have to keep rates on hold. Markets estimated the probability of a September rate cut at 65%, up from 73% just before the decision. The ECB’s data-driven approach is likely to support the common currency in the near term.
Trading recommendation: Trade predominantly with Buy orders from the current price level.
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