EUR/USD and GBP/USD Latest The US dollar is sliding lower as US rate cuts near EUR/USD and GBP/USD post multi-month highs The minutes of the last FOMC meeting are released later in today’s session and will show a more detailed picture of why the Fed decided to keep rates unchanged at 5.25%-5.5%.
The US dollar index (DXY) has moved sharply lower over the last two months as traders price in a more dovish Fed.
The technical outlook for DXY remains negative with two bearish flag formations on the daily chart keeping downward pressure on the dollar.
US Dollar Index (DXY) Daily Chart The Euro and Sterling have benefited from this weak dollar backdrop with EUR/USD and GBP/USD making fresh multi-month highs yesterday.
EUR/USD has made a strong recovery after posting a five-month low of 1.0600 in mid-April and Monday’s bullish 50-day/200-day simple moving average crossover suggests that the pair are likely to move higher in the coming weeks.
EUR/USD Daily Chart The GBP/USD daily chart also looks positive with an unbroken series of higher lows and higher highs made since late-April.
While Sterling has strengthened in its own right recently, further gains in the pair will be dictated by the US dollar outlook.
GBP/USD Daily Chart Charts usingTradingView
Updates on EUR/USD and GBP/USD.
As US rate cuts get closer, the value of the US dollar is declining.
Both GBP/USD and EUR/USD reach multi-month highs.
The FOMC minutes from its most recent meeting will be made public later in today’s session and will provide a more thorough explanation of the Fed’s reasoning for maintaining rates at 5 to 5 percent. Numerous data releases since the July meeting have indicated the US economy is becoming weaker, which raises the possibility that the Fed will begin reducing interest rates in September. At present, financial markets are pricing in a probability of 67.5% for a 25-basis point increase and 32.5 percent for a 50-basis reduction.
Traders’ focus will shift to chair Powell’s appearance at this year’s Jackson Hole Symposium on Friday, as the market has already priced in today’s FOMC minutes. In September, Chair Powell is anticipated to declare that the facts and circumstances support a series of interest rate reductions. The markets will be watching closely to see if Powell sticks to the current market pricing of 100 basis points of cuts this year or if he deviates from the presumptions. A 50bp move at one of the three FOMC meetings remaining this year would be necessary to achieve 100 basis points of cuts.
During the past two months, the US dollar index (DXY) has dropped precipitously as traders have priced in a more dovish Fed. Two bearish flag formations on the daily chart are maintaining downward pressure on the dollar, which contributes to the negative technical outlook for DXY.
US Dollar Index (DXY) Chart for Each Day.
With yesterday’s new multi-month highs for EUR/USD and GBP/USD, the Euro and Sterling have benefited from the weak dollar backdrop.
The euro/dollar pair has recovered strongly from its five-month low of 1pt0600 in mid-April, and Monday’s bullish crossover of the 50-day/200-day simple moving average indicates that further gains are likely in store for the pair in the upcoming weeks.
EUR/USD Daily Chart.
With a continuous run of higher highs and lower lows since late April, the GBP/USD daily chart also appears promising. Even though Sterling has recently gained strength on its own, the US dollar’s outlook will determine whether the pair continues to rise.
USD/GBP Daily Chart.
charts made with TradingView.
