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EUR Slide Deepens
EURUSD remains under heavy selling pressure into the middle of the week as the post-ECB slide deepens. Speaking yesterday, ECB chief Lagarde reiterated the bank’s dovish messaging, and warned that inflation could fall to target quicker than expected, given the current trajectory. The market is currently forecasting the ECB to continue cutting rates through summer next year. At the latest meeting the bank cut rates once again and signalled that further easing would likely be appropriate. On the back of that meeting, rate-cut bets remain elevated with the market pricing in at least another 1.5% worth of easing through to summer 2025.
Fed/ECB Divergence
On the back of Lagarde’s comments yesterday, easing expectations have risen still. The market is now pricing in a roughly 30% chance of a larger .5% cut in December. Resilience in the US Dollar is also weighing on EURUSD currently. At the same time that ECB easing expectations are rising, the market is pairing back its Fed easing outlook with some now doubting the chances of back to back cuts in November and December. USD has risen firmly in recent weeks, supported by this view. If we see any further strong labour market data or an uptick in inflation ahead of that December meeting, EURUSD could push deeper still.
Technical Views
EURUSD
The sell off from the double top is gathering pace. Price is now trading firmly back under the 1.0937 level and the bear trend line with 1.0724 the next support to watch. Momentum studies remain bullish here, keeping focus on further downside while below 1.0937.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.