The single European currency is just above the 1.11 mark and has reached new highs for 2024, boosted by a questionable environment for the US dollar ahead of the Fed’s first interest rate cut at its next meeting.
The data released in recent weeks on the evolution of inflationary pressures in the US and on the labor market continue to act as catalysts for the slight rise in the euro, as the prospect of a narrowing of the interest rate gap between the dollar and the euro remains high.
In any case, we must not forget that the European Central Bank will take similar decisions, with the result that the interest rate differential will continue to be clearly in favour of the US currency, which could put the US dollar back on track in the medium term.
On the other hand, speculation surrounding a possible Fed rate cut could increase and call into question the high level of 1.1150 at the end of 2023.
Apart from the data on consumer inflation in the Eurozone, there is nothing important on the agenda today. The focus will shift to tomorrow, when the minutes of the last Fed meeting are released.
Betting is currently focused on the possibility of a 25 basis point Fed rate cut in September. If there is a surprise, tomorrow’s minutes could increase volatility and set new standards in the markets.
The euro’s slight upward momentum is still present, but I remain skeptical about its continuation.
I suspect that fatigue will soon set in and the further climb will be difficult.
I will consider the possibility of buying the US dollar before the 1.12 level, as I believe that a continuation of the rise towards the 1.15 level remains a scenario, but perhaps not for now.
