The EUR/USD is holding near 1.1150 in the early hours of Monday’s session. The U.S. dollar could lose value on the back of the increased possibility of further interest rate cuts by the Federal Reserve this year, which could underpin the EUR/USD.
Last week, the Fed cut interest rates by 50 basis points, bringing them to between 4.75% and 5.00%. Policymakers also predicted an extra 75 basis points of rate cuts by the end of the year.
However, Fed Chairman Jerome Powell said at the subsequent press conference that the Fed is in no rush to ease monetary policy and emphasized that future rate cuts of 50 basis points would be the standard going forward.
Last Friday, Philadelphia Fed President Patrick Harker stated that the Fed has effectively navigated a complex economic outlook recently. Harker compared monetary policy to driving a bus, where maintaining the right speed is crucial. He also emphasized that achieving maximum employment is about more than just the number of jobs, as the quality of those jobs must also be considered.
Regarding the euro, European Central Bank President Christine Lagarde stressed during her speech last Friday that monetary policy must remain adaptable in a world that is constantly evolving. While price stability remains the core objective of monetary policy, banks must be flexible in responding to the challenges of a changing economy.
EUR/USD traders are likely to look closely at the Purchasing Managers’ Index (PMI) data for the Eurozone and Germany due for release today, Monday. The monthly PMI is used as a leading indicator of business activity, providing information on economic health and trends.
EUR/USD Daily Technical Analysis for September 23th:
EUR/USD may be in a fairly familiar range and the highs made last Wednesday may be an overly ambitious target. Traders may seek quick bets early this week, a strategy boosted by the release of US GDP figures, which could offer stronger economic data. EUR/USD is likely to rebound quite strongly over the next three days as financial institutions prepare for the US growth releases.
Also, keep in mind that U.S. employment figures will be released on October 4. Short-term investors should be ready for bullish trades that could show sudden spikes if sentiment changes this week. The coming days will test key levels as balance is contested, so risk management should remain cautious, even as day traders bet on the upside.
