EUR/USD Strengthens as Fed Rate Cut Expectations Strengthen
The EUR/USD currency pair strengthened slightly in today's trading, breaking through the 1.1714–1.1750 range, driven by a weaker US dollar following the release of weaker-than-expected US employment data and expectations of further interest rate cuts by the Federal Reserve (The Fed).
According to a recent Reuters survey, the market now expects the Fed to potentially cut interest rates two more times this year, with the possibility of another cut in early 2026. These expectations of monetary easing have caused the dollar to lose its appeal among investors.
Last week's weaker-than-expected US Nonfarm Payrolls (NFP) data further pressured the greenback. The market also assessed that the FedWatch Tool indicated a near-certainty of a 25 basis point cut in September, with a roughly 55% chance of an additional cut in October.
This situation provides more room for the euro to strengthen. Analysts predict that EUR/USD could again challenge the psychological level of 1.20, its highest level since 2021, if this trend continues.
Technically, EUR/USD remains bullish. Investing.com's technical summary on daily and monthly timeframes indicates a Strong Buy, with the majority of Moving Averages (MAs) supporting the uptrend.
Price-wise, the nearest resistance is at 1.1741. If broken through, EUR/USD has the potential to continue rising towards 1.1829. Meanwhile, the 1.1573 area is key support that must be maintained. A drop below this level could trigger a deeper correction to the 1.1390 range.
With the combination of US dollar weakness due to expectations of a Fed rate cut and strong technical support, EUR/USD's movement today remains skewed to the upside. Investors are advised to remain vigilant about volatility, especially ahead of the release of US inflation data and statements from European Central Bank (ECB) officials in the coming days.
Source: Newsmaker.id
