EUR/USD Poised for More Upside as Key 1.12 Breakout Appears Growingly Likely
2024.09.26 06:29
- The EUR/USD pair is gaining momentum as expectations rise for a jumbo Fed rate cut in November.
- Key economic data and Fed commentary this week will guide traders’ strategies.
- Watch for critical support at 1.1125; a weekly close above this level could signal further bullish potential.
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The pair is rising as the Fed gears up to deliver another jumbo rate cut, fueled by growing concerns about the U.S. economy.
Investors are focused on economic data and Fed officials’ comments for insights into future monetary policy shifts. The recent decline in , coupled with a softening labor market, points to a 50-basis-point rate cut next month.
Powell’s Speech, PCE, GDP in Focus Next
Fed Chairman Powell’s speech will take center stage, with officials highlighting that their future actions will hinge on macroeconomic indicators.
Today’s second-quarter figures and tomorrow’s Personal Consumption Expenditures Index () are critical to watch.
If tomorrow’s PCE data reinforces the notion that inflation pressures are easing, we could see a continued decline in risk appetite across the markets.
It’s crucial that today’s third growth reading for the U.S. economy doesn’t deviate significantly to alleviate rising recession concerns. Employment data will also capture the Fed’s focus ahead of its next interest rate decision on November 7.
China Stimulus, Poor Data From Eurozone Are Key Factors
Another key topic this week is the People’s Bank of China (PBoC), which is expected to announce additional stimulus measures to revive its economy.
These initiatives could significantly impact the global economic landscape, adding another layer of complexity for the Fed as it considers interest rate cuts.
While developments in the U.S. economy primarily influence the EUR/USD pair, the Eurozone also plays a role in its volatility.
Recent data indicate a slowdown in the European economy, which may compel the European Central Bank (ECB) to continue cutting rates.
EUR/USD: Technical View
Yesterday, the EUR/USD pair surged to 1.1214, marking its highest level in a year, but quickly retreated toward the 1.1125 support level.
As we look ahead to the rest of the week, as long as the pair stays above 1.1125, we could see further attempts to break through the 1.12 range.
A weekly close at the 1.12 level might pave the way for a rise toward the 1.125-1.132 band. Conversely, if the pair slips below the 1.1125 support, it may pull back toward the 1.111 and then 1.107 levels.
In summary, the 1.1125 support level has become a pivotal point for the EUR/USD trend moving forward.
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