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28.08.202415:12 Forex Analysis & Reviews: EUR/USD: Analysis and Forecast

Exchange Rates 28.08.2024 analysis

Today, the major currency pair is declining due to the recovering U.S. dollar and the prospect of ECB rate cuts, which are supported by the Eurozone economy.

Despite the moderate recovery of the U.S. dollar, it remains vulnerable because the Federal Reserve is expected to start lowering interest rates in September.

Exchange Rates 28.08.2024 analysis

However, even though the September rate cut has been fully priced in by traders, expectations are still divided regarding the size of the cut: it could either be 25 basis points or 50 basis points. According to the CME FedWatch tool, the probability of a 50 basis point rate cut in September is 34.5%, while most traders lean towards a 25 basis point cut.

For more detailed information on the potential size of the rate cuts, attention should be paid to the PCE (Personal Consumption Expenditures) inflation data, which will be released on Friday. Signs of further core inflation decline will trigger expectations that the Fed will take an aggressive approach to policy easing. Conversely, strong figures will soften this scenario of a sharp rate cut.

From a technical perspective, the RSI (Relative Strength Index) was in the overbought zone, so a downward correction was expected. Nevertheless, the rising 20-week exponential moving average (EMA) supports further increases.

Exchange Rates 28.08.2024 analysis

On the other hand, the July 2023 high at 1.1275 will become the next stop for euro bulls. It is expected that the decline will remain cushioned near the psychological support level of 1.1000.

*El análisis de mercado publicado aquí tiene la finalidad de incrementar su conocimiento, más no darle instrucciones para realizar una operación.

Irina Yanina,
Analytical expert of InstaSpot
© 2007-2024
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