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

AUD/USD: Analysis and Forecast

The AUD/USD pair continues its sideways consolidation, remaining within a familiar range near the key psychological level of 0.6300. This movement is driven by several factors impacting global market sentiment

Irina Yanina 11:16 2025-03-28 UTC+2

EUR/USD. Analysis and Forecast

Today, the EUR/USD pair is consolidating near the key psychological level of 1.0800, showing no intention of retreating below 1.0780 as traders and investors await the release of the U.S

Irina Yanina 10:45 2025-03-28 UTC+2

Markets at a Crossroads Ahead of Tariff Announcement by D. Trump (Possible Decline in CFD Contracts on #SPX and #NDX Futures)

Markets are now fully convinced that the U.S. President will follow through on his plans to implement severe customs tariffs aimed at closing the domestic market and, in doing

Pati Gani 10:39 2025-03-28 UTC+2

Markets Have Found the Culprits

If you don't get it the first time, you will the second. The S&P 500 sell-off, led by U.S. and foreign automaker shares, continued a second day after the imposition

Marek Petkovich 08:19 2025-03-28 UTC+2

What to Pay Attention to on March 28? A Breakdown of Fundamental Events for Beginners

A fair number of macroeconomic events are scheduled for Friday, but we believe they will likely trigger only a localized market reaction. The UK will publish Q4 GDP data

Paolo Greco 06:26 2025-03-28 UTC+2

GBP/USD Pair Overview – March 28: The Pound Barely Fell Before Rising Again

The GBP/USD currency pair traded higher again on Thursday, even though a semblance of a downward correction had begun just a few days earlier. The market had already digested

Paolo Greco 03:00 2025-03-28 UTC+2

EUR/USD Pair Overview – March 28: Donald Trump Loves Surprises

The EUR/USD currency pair maintained its downward bias on Thursday, although it traded higher throughout the day. Volatility remained low once again, indicating weak market activity. However, traders had enough

Paolo Greco 03:00 2025-03-28 UTC+2

EUR/USD. Trump Sends the Dollar into Knockdown Again

The EUR/USD pair is experiencing a correction following Donald Trump's latest statements, as he has once again reignited the tariff war. Interestingly, the greenback initially reacted positively to the president's

Irina Manzenko 23:44 2025-03-27 UTC+2

Gold Knows the Path to Victory

Gold was not a market favorite following Donald Trump's victory in the November elections. In fact, it pulled back once the red wave became clear and the Republican's return

Marek Petkovich 10:55 2025-03-27 UTC+2

XAU/USD – Analysis and Forecast

Gold continues to hold its intraday gains, trading near the weekly high around the $3036 level. This is due to several factors, including uncertainty surrounding U.S. trade policy

Irina Yanina 10:44 2025-03-27 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.