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Ethereum may need to shave off 4% of its value amid rally signs following ETH ETF updates

398445   June 27, 2024 03:06   FXStreet   Market News  

• Ethereum could see a 40% rally two months after spot ETH ETF goes live, says StoneX.
• SEC Chair says spot Ethereum ETF approval process “going smoothly.”
• Ethereum may need to shed 4% of its value before staging a comeback.

Ethereum is down 1% on Wednesday following brokerage and financial services firm StoneX predicting a 40% gain for the largest altcoin two months after ETH ETFs go live. Meanwhile, Securities & Exchange Commission (SEC) Chair Gary Gensler provided positive updates that the spot ETH ETF approval process is going smoothly.

Daily digest market movers: 40% ETH price growth, ETH ETFs launch

A recent analysis by StoneX predicts that the launch of spot Ethereum ETFs could trigger a 40% growth in ETH’s price two months after they go live. In a wider time frame, StoneX’s model predicts that ETH’s price will be between $2,142 and $12,621 over the next two years.

The company mentioned that its “conservative” predictions are due to the belief that NFTs won’t see more mainstream attention as they did in 2021. The analysis also suggested that video games and real-world assets (RWA) — which many believe will boost TVL and user adoption — may not see tangible growth.

Prospective spot ETH ETF issuers filed their amended S-1 registration statements with the SEC last week following comments from the agency. The SEC approved issuers’ 19b-4 applications on May 23 but also needs to greenlight their S-1s before ETH can begin trading.

The StoneX analysis follows Bloomberg analyst Eric Balchunas’s suggestion that ETH ETFs will capture lower net flows than Bitwise CIO Matt Hougan predicted because “ETH futures ETF were a borderline flop.”

Hougan predicted that spot Ethereum ETFs will attract up to $15 billion in net flows by the end of 2025. He arrived at the $15 billion figure by analyzing Ethereum’s relative market cap compared to Bitcoin, international crypto ETFs volume, Grayscale Ethereum Trust conversion, and the Bitcoin “carry trade.”

Meanwhile, SEC Chair Gary Gensler commented in a Bloomberg event on Tuesday that the process of launching spot Ethereum ETFs is “going smoothly.” He stated that the products going live depend on asset managers making full disclosures in their registration statements.

ETH technical analysis: Could Ethereum shed 4% of its value 

Ethereum is trading around $3,350 on Wednesday, down nearly 1.2% in the past 24 hours. ETH’s total liquidations in the past 24 hours have reached $21.82 million, with long positions accounting for 61% of liquidations and shorts 39%.

ETH open interest (OI) has been declining — although at a slow pace — sitting at $15.09 billion today. This indicates that traders are more cautious, especially as wider bearish sentiment seems to be overshadowing bullish sentiment around the potential launch of spot ETH ETFs.

Ethereum’s 30-day Market Value to Realized Value (MVRV) ratio is at -7%, indicating all addresses that purchased ETH within the last 30 days are at an average loss of 7%. Historically, ETH often rebounds when the 30-day MVRV reaches -15% to -17%.

ETH/USDT 4-hour chart

As a result, ETH may need to shed 4% of its value to collect liquidity around the fair value gap of May 20, extending from $3,110 to $3,457 before a fresh rise. The $3,203 key support level could prove crucial in the potential decline to help ETH bounce back up.

PEPE holders realize over $18 million in gains in ten days, wipe out nearly 4% in value

398443   June 27, 2024 03:05   FXStreet   Market News  

• PEPE whales are distributing their holdings, early Wednesday one whale transferred $14 million in tokens to Binance. 
• PEPE holders realized over $18 million in profits in past ten days. 
• Meme coin is down nearly 4%, trading at $0.00001248.

Pepe (PEPE) is trading at 0.00001248, down nearly 4% on Wednesday. The frog-themed meme coin noted consistent profit-taking by traders in the past ten days. 

Consistent profit-taking typically increases selling pressure on an asset and is likely to push the price lower. On-chain data trackers observed a spike in PEPE deposits to centralized exchanges, contributing to the rising selling pressure. 

PEPE holdersÂ’ profit-taking and exchange deposits could push prices lower

The frog-themed meme coin has noted a spike in profit-taking by holders in the past ten days. Data from crypto intelligence tracker Santiment shows that between June 15 and 25, PEPE holders realized over $18 million in profits. 

Despite massive profit-taking, the meme coin has sustained seven-day gains of 14.31%. 

PEPE network realized profit/loss vs price

Data from Spotonchain shows that whale wallet “0x387” transferred 1.1 trillion PEPE tokens worth $14.2 million to Binance, a centralized exchange address “0x0b1.” Analysts at Spotonchain suspect that the tokens are likely to be sold, or “offloaded” by the whale.

The whale wallet has another $3.78 million or 300 billion PEPE left, and the estimated total loss of the address is $1.7 million. 

PEPE supply on exchanges has climbed to over 171 trillion on June 27. PEPE supply has climbed nearly 1% in the past ten days. It remains to be seen whether the meme coin extends its losses.

Pierre Andurand ditches oil in favor of copper and cocoa

398442   June 27, 2024 02:56   Forexlive Latest News   Market News  

Famed oil trader Pierre Andurand is out of the oil market, at least for now. His main fund lost around 50% last year on bad bets on crude and he’s soured on the sector and now has a ‘mixed’ outlook.

“We will reengage in the oil markets once we obtain greater clarity on the supply side,” he wrote in a letter obtained by Bloomberg.

Instead, the firm is sticking with bets on copper and cocoa, two commodities that hit records last month but has since pulled back.

Through May, the main fund was up about 22% and the riskier enhanced fund up 63%. Andurand spoke last month about cocoa and cites bad weather, climate change, a scarcity of fertilizer, and the outbreak of two separate plant diseases as reasons to be bullish.

WTI crude oil settled fractionally higher today at $80.85.

Australian Dollar strengthens following hot CPI

398441   June 27, 2024 02:45   FXStreet   Market News  

• Australian Dollar is a top performer from the session, favored by hot CPI figures from May.
• Following May’s hot CPI figures, the market closely watches further inflation indications for potential RBA action.
• If the RBA holds hawkish, the downside for the Aussie is limited.

Wednesday’s session observed an incline in the Australian Dollar (AUD), as it rose to the mark of 0.6690 against the US Dollar, before retracing back to the 0.6650 mark. The recently released Australian inflation data, which came in higher than expected, benefited the Aussie against its peers, but the Greenback itself is also trading with vigor.

In Australia, despite signs of a weaker economy, the stubbornly high inflation acts as a hindrance to the Reserve Bank of Australia’s (RBA) potential rate cuts, potentially limiting downside pressure on the Aussie.

Daily Digest Market Movers: Aussie shows resilience amid hot CPI figures

• On the data front, Australia’s May Consumer Price Index CPI ran hot. The headline came in at 4.0% YoY vs. 3.8% expected and 3.6% in the previous month.
• This marked the third consecutive month of acceleration to the highest since November, moving further above the 2-3% target range
• As a result of these developments, the swaps market is now pricing in nearly 40% odds of a 25 bps rate hike on September 24, extending to nearly 50% for November 5.
• In the last meeting, Governor Bullock affirmed the RBA “will do what is necessary” to bring inflation back to target and foresees a longer period before inflation gets sustainably back in the target range.
• Accordingly, with the RBA ruling out rate cuts and with markets potentially considering rate hikes, the downside on the Aussie is set to remain constrained.

Technical analysis: AUD/USD looks to retain buyer interest at 20-day average

From a technical standpoint, the outlook remains fairly neutral with no clear directions. The Relative Strength Index (RSI) continues to stay above 50 but remains flat. The Moving Average Convergence Divergence (MACD) continues in the negative sphere with a series of red bars. Anticipation builds around buyers retaining the AUD/USD above the 20-day Simple Moving Average (SMA), a key defensive line that could dictate the future momentum of the pair.

Heavy industry employment will be crushed by AI

398440   June 27, 2024 02:40   Forexlive Latest News   Market News  

Shares of Nvidia are down 2.1% today after trading higher earlier. It’s been volatile in the past week after rising to briefly become the world’s most-valuable company.

Nvidia Chief Executive Jensen Huang spoke at the company’s annual meeting today and one of his comments stood out on the macro front. He said the next frontier of AI will be automating the $50 trillion heavy industry.

“A new industrial revolution has begun,” he said.

He’s talking about things like:

• Manufacturing
• Construction
• Energy
• Mining
• Transportation

I wouldn’t be against him and I believe that AI will unlock robotics. Globally, around 1 billion people work in those industries, with about half of that in manufacturing. In the US, manufacturing employs 12.8 million workers, construction 8.2 million, mining 560,000 and around 200,000 in fossil fuels extraction and refinement.

Now all those jobs aren’t on the chopping block but that’s 21.76 million jobs at risk, or about 13.2% of the US labor force. Even if half of those jobs are lost, unemployment would rise to 11% and there would be major knock-on effects in related industries.

Notably, the US is a service-sector driven country. There are many places in the world where these industries represent +50% of employment.

Gold price slumps as US Dollar soars amid high US yields

398438   June 27, 2024 02:33   FXStreet   Market News  

• Gold drops pressured by strong USD and rising Treasury yields.
• DXY hits new monthly peak at 106.13, 10-year yield is up 5.5 bps.
• FedÂ’s Bowman hints at steady policy and possible hikes if inflation falters.
• Upcoming PCE report expected to show mild inflation decline.

Gold price slumped more than 0.70% on Wednesday as the Greenback soars, underpinned by high US Treasury yields, ahead of the release of the Personal Consumption Expenditures (PCE) Price Index report on Friday. Investors are beginning to price out less easing by the Federal Reserve (Fed), sponsoring the buckÂ’s last leg up. The XAU/USD trades at $2,301 after hitting a daily high of $2,323.

The US Dollar Index (DXY) hit a new monthly high of 106.13 due to the jump in US yields. The 10-year Treasury note yield gains five and a half basis points (bps) at 4.304%.

Fed Governor Michele Bowmanstated on Tuesday that monetary policy will remain steady for “some time” and added that a rate hike would be needed “should progress on inflation stall or even reverse.”

Focus this week will be on the FedÂ’s preferred gauge for inflation, the May PCE, which is expected to drop from 2.7% to 2.6% YoY, while core PCE is foreseen at 2.6% YoY, down from 2.8%.

Other data will be released, such as the Gross Domestic Product (GDP) Q1 2024 final reading, Durable Goods Orders and Initial Jobless Claims.

Daily digest market movers: Gold price extends its losses on strong US Dollar

• On Monday, San Francisco Fed President Mary Daly leaned dovish as she said, “At this point, inflation is not the only risk we face,” expressing worries about the labor market.
• Fed Governor Lisa Cook was neutral on Tuesday, saying that inflation was most likely to fall “sharply” next year, adding that it would be necessary to ease policy to keep the FedÂ’s dual mandate more balanced.
• On Thursday, the US economic docket will feature the release of Q1 GDP, expected to end at 1.4% QoQ, down from last yearÂ’s Q4 3.4%.
• Durable Goods Orders for May are expected to contract from 0.7% to -0.1%.
• According to CME FedWatch Tool, odds for a 25-basis-point Fed rate cut in September are at 56.3%, down from 59.5% last Tuesday.
• The December 2024 fed funds rate futures contract implies the Fed will ease policy by just 35 basis points (bps) toward the end of the year.

Technical analysis: Gold price respects Head-and-Shoulders neckline, prints new low below $2,300

Gold price remains bearishly biased as the Head-and-Shoulders chart pattern remains in play. The XAU/USD spot price has been unable to crack the neckline, validating the chart pattern, which hints that further downside is expected.

Therefore, the XAU/USD next support would be $2,300. Once cleared, the non-yielding metal would fall to $2,277, the May 3 low, followed by the March 21 high of $2,222. Further losses lie underneath, with sellers eyeing the Head-and-Shoulders chart pattern objective from $2,170 to $2,160.

Conversely, if Gold reclaims $2,350, that will expose additional key resistance levels like the June 7 cycle high of $2,387, ahead of challenging the $2,400 figure.

Forex Today: Investors look at US PCE and French elections

398437   June 27, 2024 02:21   FXStreet   Market News  

The Greenback regained further traction and climbed to multi-week highs on the back of the FedÂ’s policy divergence vs. some of its G10 peers and hawkish Fedspeak, while multi-decade lows in the Japanese yen also added to the DollarÂ’s gains.

Here is what you need to know on Thursday, June 27:

The USD Index (DXY) added to TuesdayÂ’s advance and managed to reclaim the area beyond the 106.00 barrier along with further upside in US yields. On June 27, the final Q1 GDP Growth Rate will be at the centre of the debate, seconded by Durable Goods Orders, advanced Goods Trade Balance, pending Home Sales and weekly Initial Jobless Claims.

EUR/USD remained well on the defensive and dropped to new monthly lows near 1.0660 on the back of the DollarÂ’s march north. The EMUÂ’s final Consumer Confidence gauge, Economic Sentiment and Industrial Sentiment are due on June 27.

GBP/USD flirted with its monthly lows near 1.2620 against the backdrop of further improvement in the Greenback and the broad-based offered stance in the risk-linked galaxy. The BoEÂ’s Financial Stability Report (FSR) is due on June 27.

USD/JPY advanced to multi-decade peaks well north of the 160.00 hurdle amidst rising prudence on potential FX intervention by the BoJ. Retail Sales and weekly Foreign Bond Investment figures are expected on June 27.

AUD/USD printed humble gains on expectations that the RBA might keep its restrictive stance for longer, all in response to higher-than-expected inflation figures in Australia. Consumer Inflation Expectations are due on June 27 along with the speech by RBAÂ’s Hauser.

Prices of the WTI remained stuck within their range near $81.00 following another unexpected build in US crude oil supplies and persistent demand concerns.

Gold prices revisited the area below the $2,300 mark per ounce troy, down for the second consecutive session on the back of the stronger Dollar and higher yields. Silver extended its bearish trend and clinched new six-week lows near $28.60.

Dow Jones Industrial Average treads water on tepid Wednesday

398434   June 27, 2024 02:09   FXStreet   Market News  

• Dow Jones hung up on the 39,000.00 handle amid quiet midweek markets.
• Fedspeak continues to press down on rate cut hopes.
• Investors buckle down for the wait to key data on Thursday and Friday.

The Dow Jones Industrial Average (DJIA) is churning just above 39,000.00 in tepid Wednesday trading as markets hunker down for the wait to key data in the back half of the trading week. Federal Reserve (Fed) officials have repeatedly noted the need for patience on policy rates. The US central bank continues to look for firmer signs that inflation will continue easing to the FedÂ’s 2% annual target. A notable lack of economic slowdown and a still-tight labor market leaves the Fed with little need to rush into rate cuts. Several Fed officials have cautioned that there might be no rate cuts in 2024, while the FedÂ’s median dot plot of rate expectations suggests only a single quarter-point cut for the year.

A notable lack of data on Wednesday leaves investors to fidget in place and wait for a raft of key US datapoints slated for release on Thursday and Friday. US Durable Goods Orders, a revision to first-quarter US Gross Domestic Product (GDP), and Initial Jobless Claims are all due Thursday. Friday will round out the trading week with a fresh print of US Personal Consumption Expenditure Price Index (PCE) inflation figures for May.

Investors with hopes pinned on at least a quarter-point rate cut from the Fed in September will look for soft-but-not-too-soft US economic figures. Too good a print means the Fed will be even less likely to deliver an early rate trim, while too bad of a data calendar will mean the US is headed for a recession, leaving rate-cut-hungry markets to dream of a happy middle ground.

Dow Jones news

The Dow Jones is up a scant 30 points rounding the corner into the final stretch of WednesdayÂ’s US market session. The major equity index is getting propped up by firm gains in market favorites, but most of the Dow JonesÂ’ constituent securities are in the red on Wednesday, with two-thirds of the listed stocks softly in the red.

Amazon.com Inc. (AMZN) surged nearly 4.5% on Wednesday, approaching $195.00 per share, with Apple Inc. (AAPL) struggling to keep pace, rising 2.3% to $214.00 per share. On the downside, Amgen Inc. (AMGN) and Travelers Companies Inc. (TRV) are each down around 1.7% apiece, with Amgen falling below $315.00 per share and Travelers Companies falling to $205.00 per share.

Dow Jones technical outlook

Dow Jones remains within touch range of the previous dayÂ’s closing bids near 39,100.00 on Wednesday. The DJIA remains down from last weekÂ’s peak near 39,600.00, but a near-term floor is priced in at WednesdayÂ’s early lows just above 38,900.00.

Daily candlesticks continue to hold just above the 50-day Exponential Moving Average (EMA) at 38,878.00 as bidders try to drag the large-cap index back towards all-time highs set in May just north of the 40,000.00 major handle.

Dow Jones five minute chart

Dow Jones daily chart

Credit Agricole: EUR oversold and CHF overbought according to positioning model

398433   June 27, 2024 02:02   Forexlive Latest News   Market News  

Credit Agricole’s latest G10 FX PIX 2.0 model indicates significant shifts in currency positioning. The EUR is now deemed oversold, while the CHF has turned overbought. These findings are based on recent IMM flow data and overall market sentiment.

Key Points:

1. G10 FX PIX 2.0 Model Insights:

   • The model shows GBP, CHF, and NZD as overbought.
   • The EUR is identified as oversold.

2. EUR Positioning:

   • Recent selling pressure on the EUR has primarily been driven by IMM flows.
   • FX flow data indicates inflows from banks, corporates, and hedge funds.
   • Real money investors have been net sellers of the EUR.
   • Overall, the EUR has moved into oversold territory.

3. CHF Positioning:

   • The CHF experienced buying interest, predominantly from IMM flows.
   • Real money investors have been net buyers of the CHF.
   • Banks, corporates, and hedge funds have been net sellers.
   • As a result, the CHF is now considered overbought.

Conclusion:

Credit Agricole’s positioning model highlights an oversold EUR and an overbought CHF. This shift in market positioning suggests potential opportunities for investors. The oversold status of the EUR could present buying opportunities, while the overbought status of the CHF may warrant caution or profit-taking. Monitoring these positioning dynamics could be crucial for making informed trading decisions in the FX market

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Dogwifhat price breakout signals potential rally above $2.1 resistance

398430   June 27, 2024 01:33   FXStreet   Market News  

• Dogwifhat price broke a descending trendline on Tuesday and trades above $2 on Wednesday.
• On-chain data shows that the largest WIF holder has accumulated 2.3 million tokens worth $4.67 million.
• A daily candlestick close below $1.54 would invalidate the bullish thesis.

Dogwifhat (WIF) price broke out of a descending trendline on Tuesday and is trading above $2 as of Wednesday. On-chain data reveals that the largest whale has accumulated 2.3 million tokens valued at $4.67 million, indicating potential for an upside rally in the coming days.

WIF whale accumulate

Data from Lookonchain shows that the largest holder of WIF has bought 2.3 million tokens worth $4.67 million. This whale holds 23.39 million WIF tokens worth $49.6 million, with a profit of $83 million.

In addition, the holder also spent 86,738.1 Solana tokens worth $8.65 million in one trade to buy 17.22 million WIF tokens.

WIF price shows potential

Dogwifhat price broke out of a descending trendline on Tuesday and is trading above $2 as of Wednesday. This trendline is drawn by joining multiple swing high levels from June 5 to June 25.

If this trendline holds as pullback support and the WIF price closes above the $2.10 daily resistance level, it could rally 25% to retest its daily high of $2.64 from June 17.

The Relative Strength Index (RSI) on the daily chart is rising from an oversold condition and looking to break above the mean value of 50. The Awesome Oscillator (AO) indicator is below the mean zero level. If bulls are indeed making a comeback, then both momentum indicators must maintain their positions above their respective mean levels. This development would provide additional momentum to the ongoing recovery rally.

WIF/USDT daily chart

Even though on-chain metric and technical analysis point to a bullish outlook, if DogwifhatÂ’s price makes a daily candlestick close below $1.54, the bullish thesis would be invalidated by creating a lower low on the daily chart. This development could see WIF’s price crash by 35% to retest the March 5 low at $1.

US Dollar stalls around 106.00 in the DXY after declining New Home Sales takes the wind out of the rally

398429   June 27, 2024 01:21   FXStreet   Market News  

• The US Dollar trades firmly in the green against nearly all major peers. 
• A light data calendar is ahead as markets digest hawkish Fed comments. 
• The US Dollar index breaks through 106.00 and heads higher

The US Dollar (USD) is outmatching other currencies on Wednesday for the second day in a row with some help from US Federal Reserve (Fed) officials, who seem to have turned more hawkish. Federal Reserve Governor Michelle Bowman lit the fire on the fuzz by saying that a rate hike is still an option while she sees too many potential risks that could still drive inflation higher. Her thesis became reality just a few hours later, after neighbouring country Canada released red-hot inflation numbers.

On the economic front, a rather light calendar ahead of Thursday’s Gross Domestic Product (GDP) final estimate and Friday’s Personal Consumption Expenditures (PCE) Price Index release. Still, traders will need to watch out for the Bank Stress Test report, to be published at 20:30 GMT, in which the Fed analyzes how healthy US banks’ balance sheets are in case of financial market distress. 

Daily digest market movers: Housing data easing further

• The Japanese Yen is cracking under pressure from the Greenback, with USD/JPY poping above the magic 160.00 level and printing a multi-decade high. 
• Markets got spooked by comments from Federal Reserve Governor Michelle Bowman on Tuesday, saying she is “willing to raise the target rate at a future meeting if inflation progress stalls or reverses”, while she “expects US inflation to remain elevated for some time, still seeing a number of upside inflation risks.”
• At 11:00 GMT, the weekly Mortgage Applications Index from the Mortgage Bankers Association (MBA) came in and went from 0.9% to 0.8%.
• New Home Sales data for May saw a decline of nearly 11.3%, from 698,000 units to only 619,000, missing the 640,000 units consensus view. 
• The US Treasury is heading to markets to allot a 5-year Note in the markets at 17:00 GMT. 
• The FedÂ’s Bank Stress Test report will come out near 20:30 GMT. 
• Equities are not licking this US Dollar strength, and are dipping lower in both Europea and the US. 
• The CME Fedwatch Tool is broadly backing a rate cut in September despite the recent comments from Fed officials, with odds now standing at 59.5% for a 25 basis point cut. A rate pause stands at a 34.1% chance, while a 50-basis-point rate cut has a slim 6.4% possibility. 
• The US 10-year benchmark rate trades at 4.28%, and trades ath the high for this week.  

US Dollar Index Technical Analysis: Stronger due to outside reasons

The US Dollar Index (DXY) is rolling for a second day in a row, and is breaking out of its sideways pattern. The DXY is now trading just below the high of May and could rally further, should upcoming US data outperform again. Clearly the recent hawkish messages from Fed officials are spooking markets in the fear of having missed out on any signals that would signal an uptick in inflation is again at hand. 

On the upside, the first level to watch is 105.88, which triggered a rejection at the start of May and on Friday last week. Further up, the biggest challenge remains at 106.52, the year-to-date high from April 16. A rally to 107.20, a level not seen since April 2023, would need to be driven by a surprise uptick in US inflation or a sudden hawkish shift from the Fed. 

On the downside, 105.52 is the first support ahead of a trifecta of Simple Moving Averages (SMA). First is the 55-day SMA at 105.23, safeguarding the 105.00 round figure. A touch lower, near 104.66 and 104.48, both the 100-day and the 200-day SMA form a double layer of protection to support any declines. Should this area be broken, look for 104.00 to salvage the situation. 

EUR/USD Forecast: A drop to 1.0600 is not ruled out

398427   June 27, 2024 01:18   FXStreet   Market News  

• EUR/USD added to TuesdayÂ’s losses below 1.0700.
• The US Dollar rose to multi-week highs, helped by yields.
• GermanyÂ’s Consumer Confidence receded in July.

The intense buying interest in the US Dollar (USD) led the USD Index (DXY) to build on TuesdayÂ’s gains and advance to multi-week highs past the 106.00 barrier on Wednesday, exerting notable pressure on risk-sensitive assets and sending EUR/USD to fresh monthly lows near 1.0660.

The negative sentiment around the euro (EUR) persisted despite decreasing political concerns in France ahead of the June 30 snap elections, while hawkish Fedspeak and the widening gap in monetary policy between the Fed and its major peers collaborated with the move lower.

Furthermore, the macroeconomic scenario remained unchanged on both sides of the Atlantic, with the European Central Bank (ECB) still considering further rate cuts beyond the summer, while market bets suggested two more rate cuts later in the year.

In contrast, market participants continued to debate between one or two rate cuts by the Federal Reserve (Fed) this year, even though the Fed had already forecasted just one cut, likely in December.

Once again, FOMC Governor Michelle Bowman repeated on Wednesday that her basic assessment is that inflation will fall further if the policy rate remains unchanged and that rate decreases will be necessary if inflation gets stably towards 2%.

From the ECB, Finnish policymaker Olli Rehn predicted bumpy inflation in the bloc, but this is expected, while data suggests price growth will meet the 2% target. Additionally, Board member Fabio Panetta suggested the ECB could gradually reduce interest rates as inflation falls, while ECB Chief Economist Philip Lane projected continued interest rate cuts if price pressures ease but may slow down in case of unexpected surprises.

The CME Group’s FedWatch Tool now indicates nearly a 63% probability of lower interest rates in September and around 93% in December.

In the short term, the recent rate cut by the ECB, compared to the Fed’s decision to maintain rates, has widened the policy gap between the two central banks, potentially leading to further weakness in EUR/USD in the near term.

However, the Eurozone’s emerging economic recovery and perceived weakening of US fundamentals are expected to reduce this disparity, possibly providing occasional support for the pair in the near future.

EUR/USD daily chart

EUR/USD short-term technical outlook

If bears remain in control, EUR/USD may first revisit the June low of 1.0666 (June 26), then the May low of 1.0649 (May 1), and finally the 2024 bottom of 1.0601 (April 16).

Occasional bouts of strength, in the meantime, could put the pair on track to revisit the 200-day SMA at 1.0789, prior to the weekly high of 1.0852 (June 12) and the June top of 1.0916 (June 4). The breakout of this level reveals the March peak of 1.0981 (March 8), which precedes the weekly high of 1.0998 (January 11) and the psychological 1.1000 yardstick.

So far, the 4-hour chart has revealed some signs of continued deterioration. The initial resistance is at 1.0746 followed by 1.0761 and 1.0802. The initial support comes in at 1.0666, ahead of 1.0649 and 1.0601. The Relative Strength Index (RSI) bounced to 39.