We are two weeks away for the Fed meeting. A growing number of analysts and market percipients are pricing nearly a 100% chance of Fed rate cut in July meeting. What happens when the Fed cuts interest rates in July is the key concern for the forex traders.
We are expecting July’s meeting is going to be the most significant event for the financial markets across the globe. In a Fed rate cut forecast situation, we tilt towards taking a long position on EURUSD.
Moody’s Analytics said, “We are raising our subjective odds of a 25-basis point rate cut in July from 75% to 90%. Beyond July, we expect an extended pause by the Fed.”.
In terms of macro data from last week, the euro area industrial production up by 0.9%. Looking ahead, it will be again reasonably a quiet week.
According to the euro stat official report, the euro area May industrial production up by 0.9% from April 0.8%.
Looking at the week ahead, it’s a reasonably quiet week in terms of data, but we will see the German ZEW economic sentiment index and the latest EA CPI figure. We expect the June inflation figure to up by 1.1% from 0.9%.
The single currency has been consolidating between 1.1180-1.1290 for four weeks. Ahead of the July Fed meeting, we favor taking long EURUSD position with a stop loss at 1.1090 with targets at 1.1350 and 1.1400. A decisive break out through June 25th high 1.1415 could rally further to the wave C 1.1500$. It is too early to make a call 1.1500, but we expect 1.1400 by the end of July.
Among the G10 bullish counters, NZD already breaches the previous swing high at 0.6725 on Monday, AUD is trading on the verge of the last swing high at 0.7050.
Whereas GBP has its concerns to follow the antipodeans trend, but a breakout above 1.2580 could allow GBP to outperform in the near term.
Turning to the single currency as long as 1.1200-1.1180 is supported (near-term) we expect a breakthrough 1.1300 (rounded).
The daily RSI is stabilizing whereas the oscillator has turned bullish and pointing the North.
It is important to always keep in mind the risks involved in trading with leveraged instruments.
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