empty
03.07.2024 04:49 PM
The euro steps out of politics

The euro is confidently moving towards the previously announced target of $1.08, despite the ongoing political uncertainty in France, the slowdown in European consumer prices, and the statement by Governing Council member Gediminas Simkus that the ECB will cut the deposit rate twice more in 2024. Investors are starting to price in the weakening of the US dollar amid ongoing worrying signals from the American economy and the readiness of FOMC officials to adopt a dovish stance.

Unlike the currency market, derivatives signal that political unrest in France is not yet over. Risk reversals in EUR/CHF and EUR/GBP pairs have not returned to levels seen in early June. It was then that Emmanuel Macron signed his political death warrant by announcing snap elections to the National Assembly.

Dynamics of EUR/CHF, EUR/GBP, and Risk Reversals

This image is no longer relevant

This could have alarmed investors, but they are beginning to understand: regardless of the outcome of the second round of voting, there will be no Frexit. Consequently, there will be no drop in EUR/USD to parity. If this is the case, the French "bearish" driver for the major currency pair can be considered played out. It's time to shift attention to other factors.

Neither the ECB nor the Fed is in a hurry to cut rates, which does not give an advantage to either EUR/USD buyers or sellers. Christine Lagarde claims that the fight against inflation is still ongoing. Philip Lane believes that the Governing Council will have the necessary data after the July meeting and notes that the European Central Bank needs time. Pierre Wunsch is only ready to support more than two acts of monetary expansion in 2024 if there is convincing evidence that inflation will return to the 2% target. The first, I remind you, took place in June. Gabriel Makhlouf believes that it is sufficient.

Dynamics of European inflation

This image is no longer relevant

Thus, the number of centrists on the Governing Council exceeds the number of "doves," which can be considered a "bullish" driver for EUR/USD.

Support for buyers came from Jerome Powell's speech in Sintra, Portugal, where he acknowledged progress in the fight against inflation in the US, as well as from yet another round of disappointing reports on the American labor market. The number of unemployment benefit claims rose more than expected, and private-sector employment from ADP was lower than Bloomberg experts predicted. This leads to a decrease in Treasury yields and the USD index.

This image is no longer relevant

Despite EUR/USD buyers' successes, there is still time to say that everything is in their favor. The decisive factors will be the non-farm payrolls and other labor market indicators, which will be released at the end of the week by July 5th.

Technically, on the daily chart, the EUR/USD bulls managed to push the quotes of the major currency pair beyond the upper boundary of the consolidation range of 1.067-1.072. Consolidation above the pivot level of 1.0765 brings the euro closer to the previously indicated targets of $1.08 and $1.0835. It is advisable to maintain long positions.

Marek Petkovich,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

Donald Trump sows confusion again with tariff remarks

United States President Donald Trump once again stirred confusion on Tuesday by announcing plans to introduce a series of exemptions to his sweeping tariff proposal. The announcement served

Jakub Novak 11:36 2025-03-26 UTC+2

XAU/USD. Analysis and Forecast

Gold continues to show a positive tone today, but conviction behind the upward movement remains weak. Market uncertainty, driven by the tariffs announced by Donald Trump—set to take effect

Irina Yanina 10:54 2025-03-26 UTC+2

USD/JPY. Analysis and Forecast

The Japanese yen remains under pressure today due to weak domestic economic data. In February, Japan's leading inflation indicator in the services sector rose by 3.0% year-over-year, slightly below

Irina Yanina 10:42 2025-03-26 UTC+2

Looks Like It's Time to Focus on the Euro and Yen (EUR/USD May Fall, USD/JPY May Rise)

Since mid-month, financial markets have been trying to recover while frantically analyzing all possible developments surrounding the trade war the U.S. launched against its largest trading partners. Investor sentiment continues

Pati Gani 08:52 2025-03-26 UTC+2

Markets Won't Rush Headfirst into the Fire

Donald Trump has dealt such a heavy blow to globalization that conditions and outlooks for the future have changed—now divided along territorial lines. While European banks believe the S&P 500's

Marek Petkovich 07:00 2025-03-26 UTC+2

What to Pay Attention to on March 26? A Breakdown of Fundamental Events for Beginners

Very few macroeconomic events are scheduled for Wednesday, and only one important report is expected. The UK will release what may seem like a significant inflation report. Inflation remains

Paolo Greco 06:03 2025-03-26 UTC+2

GBP/USD Pair Overview – March 26: The Pound Isn't Even Trying. Inertial Growth Continues

The GBP/USD currency pair resumed its upward movement on Tuesday. It did so on a day when there were no significant events in the UK, and the only noteworthy report

Paolo Greco 02:40 2025-03-26 UTC+2

EUR/USD Pair Overview – March 26: No News, No Movement

The EUR/USD currency pair traded with low volatility on Tuesday. There have been times when the euro would crawl just 40 pips a day, and while current volatility isn't extremely

Paolo Greco 02:40 2025-03-26 UTC+2

EUR/USD: The Southward Trend Stalls, but Long Positions Remain Risky

A mixed situation has developed around the EUR/USD pair. On the one hand, the bearish sentiment prevails: last week, the price reached a 5-month high at 1.0955, while on Tuesday

Irina Manzenko 23:59 2025-03-25 UTC+2

USD/JPY. Analysis and Forecast

The USD/JPY pair is retreating from the psychological level of 151.00, reached earlier on Tuesday, though this pullback is not accompanied by significant selling pressure. The Japanese yen is attracting

Irina Yanina 18:09 2025-03-25 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.