EUR/USD extends last week’s gains near 1.1120 in Monday’s North American session. The major currency pair rises as growing speculation for the US Federal Reserve (Fed) to begin the policy-easing cycle aggressively on Wednesday has weighed on the US Dollar (USD). The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, slides sharply to near 100.70.
According to the CME FedWatch tool, the probability of the Fed reducing interest rates by 50 basis points (bps) to the 4.75%-5.00% range in September has increased sharply to 61% from 30% a week ago.
Market expectations for the Fed reducing interest rates by 50 bps have increased significantly as the United States (US) annual Producer Price Index (PPI) data for August came in sharply lower than expected on Thursday.
The headline producer inflation rose at a slower pace of 1.7% year-over-year (YoY) from the estimates of 1.8% and July’s reading of 2.1%. Generally, a sharp slowdown in producer inflation results from growing worries over the demand outlook, which happens due to the weak purchasing power of households in a high-interest rate environment.
Meanwhile, market experts believe that the Fed will start reducing interest rates in Wednesday’s meeting as officials are worried about deteriorating labor market conditions, with growing confidence that inflationary pressures will sustainably return to the central bank’s target of 2%.
Ahead of the Fed monetary policy decision, investors will focus on the US Retail Sales data for August, which will be published on Tuesday. Retail Sales are estimated to have grown at a slower pace of 0.2% from 1% in July.
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Canadian Dollar.
USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
---|---|---|---|---|---|---|---|---|
USD | -0.47% | -0.58% | -0.24% | -0.03% | -0.52% | -0.45% | -0.40% | |
EUR | 0.47% | -0.16% | 0.19% | 0.41% | -0.10% | -0.03% | 0.03% | |
GBP | 0.58% | 0.16% | 0.28% | 0.57% | 0.05% | 0.14% | 0.20% | |
JPY | 0.24% | -0.19% | -0.28% | 0.23% | -0.23% | -0.20% | -0.23% | |
CAD | 0.03% | -0.41% | -0.57% | -0.23% | -0.57% | -0.42% | -0.48% | |
AUD | 0.52% | 0.10% | -0.05% | 0.23% | 0.57% | 0.08% | 0.13% | |
NZD | 0.45% | 0.03% | -0.14% | 0.20% | 0.42% | -0.08% | 0.06% | |
CHF | 0.40% | -0.03% | -0.20% | 0.23% | 0.48% | -0.13% | -0.06% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
EUR/USD extends its upside to near 1.1120 on Monday. The major currency pair strengthened after retesting the breakout of the Rising Channel chart pattern formed on a daily timeframe near the psychological support of 1.1000. The near-term outlook has strengthened as the pair steadies above the 20-day Exponential Moving Average (EMA), which trades around 1.1060.
The 14-day Relative Strength Index (RSI) moves higher to near 60.00. A bullish momentum would trigger after breaking the above-mentioned level.
Looking up, last week’s high of 1.1155 and the round-level resistance of 1.1200 will act as major barricades for the Euro bulls. On the downside, the psychological level of 1.1000 and the July 17 high near 1.0950 will be major support zones.
Following the Federal Reserve's (Fed) rate decision, the Federal Open Market Committee (FOMC) releases its statement regarding monetary policy. The statement may influence the volatility of the US Dollar (USD) and determine a short-term positive or negative trend. A hawkish view is considered bullish for USD, whereas a dovish view is considered negative or bearish.
Read more.Next release: Wed Sep 18, 2024 18:00
Frequency: Irregular
Consensus: -
Previous: -
Source: Federal Reserve
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