EUR/USD Price Analysis – Aug 19, 2024
Daily Price Outlook
During the European trading session on Monday, the GBP/USD currency pair surged to a one-month high, trading around the mid-1.2900s.
This upward momentum was supported by diminishing expectations of a Bank of England (BoE) rate cut in September, alongside a weaker US dollar, which has been pressured by dovish Federal Reserve (Fed) expectations.
The pair’s strong performance follows a significant bounce from the 200-day Simple Moving Average (SMA), signaling renewed bullish sentiment among traders.
The British Pound (GBP) remains buoyed by last week’s robust UK economic data, which has dampened hopes for an imminent rate cut by the BoE.
Meanwhile, the US dollar (USD) struggles to gain traction as investors anticipate the Fed’s rate-cutting cycle to begin as early as September.
These factors collectively underpin the GBP/USD pair’s strength, with traders now looking ahead to key events later in the week for further guidance.
GBP/USD Volatility Expected Amidst BoE Rate Cut Speculations and Fed Dovishness
On the BoE front, the Pound Sterling has maintained its strength against major currencies, supported by expectations that the BoE may hold off on cutting rates in September.
This follows stronger-than-expected UK economic data, which suggests resilience in the economy.
However, the market remains cautious as investors await more data, particularly the FOMC meeting minutes and Fed Chair Jerome Powell’s speech at the Jackson Hole Symposium later this week, for clearer direction on the Fed’s policy stance.
Despite the market’s focus on the Fed, the absence of significant UK or US macroeconomic data early in the week has led traders to tread carefully, awaiting more substantial cues before committing to aggressive directional bets.
The GBP/USD pair could experience heightened volatility as the week progresses, particularly in response to global PMIs and any updates on the Fed’s rate-cut path.
Impact of Federal Reserve Rate Cut Expectations and Geopolitical Tensions on GBP/USD
On the US front, the US dollar continues to languish near its lowest levels since January, weighed down by dovish Fed expectations.
The market remains convinced that the Fed will begin cutting rates in September, following recent comments from San Francisco Fed President Mary Daly, who emphasized a gradual approach to easing monetary policy.
This sentiment has kept US Treasury bond yields depressed, further pressuring the USD and benefiting the GBP/USD pair.
Moreover, the prevalent risk-on sentiment in global markets has reduced demand for the safe-haven US dollar, contributing to the GBP’s recent strength.
Traders are now closely monitoring upcoming events, including the FOMC meeting minutes and Fed Chair Powell’s speech, for any signals that could alter the Fed’s policy trajectory and impact the GBP/USD pair’s outlook.
EUR/USD - Technical Analysis
EUR/USD is currently trading at $1.10399, showing a slight uptick of 0.11% as the pair hovers near key technical levels.
The pivot point at $1.1073 is the critical level to watch. If the price breaks above this pivot, it could signal further gains.
The RSI is at 69, indicating that while the pair is approaching overbought territory, there is still room for upward movement before a potential pullback.
The 50-day Exponential Moving Average (EMA) at $1.0958 is trending upward, supporting the bullish outlook.
Immediate resistance is found at $1.1072, just below the pivot, followed by stronger resistance at $1.1105 and $1.1140.
On the downside, immediate support is at $1.0986, with additional support levels at $1.0956 and $1.0914. A break below these levels could signal a shift in momentum to the downside.
For traders, a buy entry above $1.10197 with a target of $1.10728 could be a strategic move, capturing potential gains as the pair approaches the pivot.
A stop loss at $1.09853 would help manage risk in case of an unexpected downturn.
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GBP/USD Price Analysis – Aug 19, 2024
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