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

GBP/USD Overview – June 24: No Confirmation of Destruction

The GBP/USD currency pair also traded relatively calmly on Monday. While there were some price "swings," many traders and analysts had expected a much more significant move. The dollar strengthened

Paolo Greco 03:45 2025-06-24 UTC+2

EUR/USD Overview – June 24: Iran Exits Talks and Launches a Retaliatory Strike

The EUR/USD currency pair traded extremely calmly on Monday, considering the intense fundamental backdrop that developed over the weekend. Recall that over the weekend, Donald Trump once again "changed

Paolo Greco 03:45 2025-06-24 UTC+2

Trump Keeps Hitting a Wall

There's a saying: "An irresistible force meets an immovable object." It describes an irreconcilable standoff where neither side is willing to compromise. In my view, Trump's "scythe," with which

Chin Zhao 00:12 2025-06-24 UTC+2

Should We Expect De-escalation in the Middle East?

The market has absorbed the news of U.S. strikes on Iran's nuclear facilities quite resiliently. Why did this happen, and why was the reaction relatively muted? These questions are unlikely

Chin Zhao 00:12 2025-06-24 UTC+2

What Will Powell Say?

Starting June 24, Fed Chair Jerome Powell will address Congress over two days, delivering the semiannual monetary policy report. On Tuesday, he will speak before the Senate Banking Committee

Irina Manzenko 00:12 2025-06-24 UTC+2

The Euro Gets a Knife in the Back

Trouble never comes alone. European industry is beginning to lose steam after rapid growth driven by a front-loaded surge in U.S. imports. The euro area is a net oil importer

Marek Petkovich 00:11 2025-06-24 UTC+2

XAU/USD. Analysis and Forecast

Today, gold is attracting new sellers. Amid a sharp escalation in the conflict between Iran and Israel, the United States conducted airstrikes on three Iranian nuclear facilities in Fordow, Natanz

Irina Yanina 17:59 2025-06-23 UTC+2

USD/JPY. Analysis and Forecast. The Japanese Yen Maintains an Intraday Bearish Outlook

Today, Monday, selling pressure on the Japanese yen dominates, driven by several factors. Traders continue to push back expectations of a potential rate hike by the Bank of Japan, assuming

Irina Yanina 17:56 2025-06-23 UTC+2

USD/CHF. Analysis and Forecast

At the moment, the U.S. Dollar Index (DXY) has reached a new two-week high, driven by hawkish signals from the Federal Reserve. The U.S. central bank has maintained its forecast

Irina Yanina 17:51 2025-06-23 UTC+2

Bitcoin longing for new highs, but something stymies

Bitcoin was created as a way to preserve value in times of turmoil, especially against the backdrop of weakening fiat currencies. It was believed that the arrival of institutional investors

Marek Petkovich 12:23 2025-06-23 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.