EUR/USD slips near $1.1672 as Fed rate cut bets rise and ECB holds steady. Key levels $1.1660–$1.1730 may define the next breakout.
Anchorage, Alaska was the focus of the market as US President Donald Trump met with Russian President Vladimir Putin...
Quick overview
- US President Trump and Russian President Putin met in Anchorage, with low expectations for a Ukraine ceasefire.
- Analysts predict a potential rise in the euro if a truce occurs, with UBS forecasting EUR/USD to reach $1.21 by year-end.
- Mixed US economic data shows retail sales increased but industrial production fell, while inflation expectations have risen.
- The EUR/USD is at a critical level, with trading strategies suggesting a short position below $1.1660 and a bullish confirmation above $1.1730.
Anchorage, Alaska was the focus of the market as US President Donald Trump met with Russian President Vladimir Putin and expectations were low for a Ukraine ceasefire. Trump said he hoped for progress but wasn’t sure what that would look like and said a truce would have to happen before broader talks could move forward.
Analysts say any truce could be positive for the euro. UBS is forecasting EUR/USD to $1.21 by year end if geopolitical risks ease. But US data was mixed. Retail Sales rose 0.5% in July, down from 0.9% in June, while Industrial Production fell 0.1% vs 0% forecast. Consumer Sentiment fell sharply to 58.6 in August from 61.7 in July.
Inflation expectations remain high: one-year forecasts rose to 4.9% from 4.5% and five-year expectations rose to 3.9% from 3.4%.
Fed Cut Bets vs. ECB Pause
Markets now see 95% chance of 25bp Fed cut in September and additional cuts in October and December. Atlanta Fed’s GDP now is 2.5% for Q3. On the ECB side, 94% chance of no change in September, effectively pausing the easing cycle.
This is putting pressure on the dollar and the US Dollar Index is down 0.36% to 97.84 while the euro is up despite softer data.
EUR/USD Technical Analysis
EUR/USD is testing a key level after breaking below the ascending trendline from late July and is now at $1.1672. Price is just below the 50-period SMA at $1.1684 and the spinning top candlesticks indicate indecision. The RSI is 43 and the MACD is suggesting a bearish crossover.
- Below $1.1660 targets $1.1590 and $1.1526
- Above $1.1728 and close would be bullish and target $1.1785
Trade: Short below $1.1660 with stop above $1.1730 targeting $1.1590-$1.1526. Bulls wait for a close above $1.1730 to confirm.
This is the make or break moment: the euro will continue to trend or the dollar will get momentum. Look for strong candlestick confirmations, engulfing or doji, on the next move.
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