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Asset Watch
Tuesday, 10 September 2024
Markets are eagerly awaiting the release of the US CPI report for August, scheduled for Wednesday. The forecast suggests that year-over-year headline inflation will decrease from 2.9% in July to 2.6% in August, while core inflation is expected to remain steady at 3.2%. This data is crucial as it offers the last glimpse of inflation before the US Fed meeting next week and could significantly influence the size of the rate cut the central bank might implement. A lower-than-expected CPI reading could encourage FOMC members to consider a 50-basis point cut, whereas a higher-than-expected reading could lead to a 25-basis point cut.
Additionally, this week, attention will also be on the ECB meeting, which is anticipated to announce its second rate cut of the year, reducing rates by 25 basis points from 3.75% to 3.50%. Traders will be keen to learn about the central bank’s forecasts for inflation and growth in Europe for the remainder of this year and into 2025. Investors will also closely watch the ECB press conference for insights into the short-term monetary policy outlook, particularly regarding the pace of the rate cut cycle. Any hawkish remarks from ECB President Lagarde could bolster the Euro against major currencies
Chart Source: ADSS Platform
On September 6, the EUR/USD corrected its upward trend and created a lower high at 1.1154. Right now, the price seems to be heading to test the September 3 low at 1.1026 and a break below this level could start a bearish sentiment towards the low end of the current trading zone located between 1.1060 and 1.0885. In this scenario, the support level at 1.0981 should be monitored.
On the flipside, a daily close above the high end of the zone suggests a possible rally towards 1.1177. A daily close above that level may encourage bulls to extend their rally towards 1.1309. If this happens, the resistance levels at 1.1277 should be kept in focus.
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