The Euro has reached a fresh two-month high of 1.1800, primarily due to the weakening of the US Dollar. This uptick is being driven by increasing expectations of a dovish shift from the Federal Reserve, which is causing the Dollar to lose ground. As EUR/USD bulls push against the 1.1790 mark, market attention is shifting toward a long-term high of 1.1830.
Recent data from Germany indicates an unexpected improvement in economic sentiment, further bolstering the Euro and helping it stay above 1.1790, a level not seen since early July. The Zentrum für Europäische Wirtschaftsforschung (ZEW) reported a rise in the German Economic Sentiment Index to 37.3 in September, surpassing market forecasts of a drop to 27.3. However, the report also noted a decline in the Current Situation Index, which fell to -76.4 from -68.6, indicating growing concerns about the present economic climate.
In the Eurozone, the ZEW Economic Sentiment Index increased to 26.1 in September, up from 25.1, defying analysts’ predictions of a decrease. Additionally, Eurozone Industrial Production recorded a modest rise of 0.3% in July despite a significant drop of 1.3% in June, with year-on-year factory activity showing a 1.8% increase.
As market expectations mount for a “dovish cut” by the Federal Reserve during their upcoming meeting, risk appetite is being stoked, allowing the Euro to gain strength. The US Dollar Index, which measures the value of the Dollar against a basket of six major currencies, has plummeted to nearly two-month lows, paralleling a surge in Wall Street indexes to record highs. This shift in the market has allowed the Euro to rise, even amidst lingering concerns about French debt.
In terms of today’s performance, the Euro has been particularly strong against the Australian Dollar, showing a positive percentage change across various major currencies. The dynamics of global currency trading reflect the Euro’s strength as the US Dollar remains under pressure due to anticipated interest rate cuts.
Technical analysis indicates that EUR/USD continues to trend upwards. The Relative Strength Index (RSI) currently sits at 66 on a four-hour chart, signifying robust bullish momentum. Achieving a peak above July 24’s high at 1.1790 has given the Euro further momentum, with immediate resistance now shifted to previous highs.
Looking ahead, the Euro’s path is influenced by both technical levels and fundamental economic indicators, as market participants await clarity from the Federal Reserve regarding its monetary policy direction. The combination of improving economic sentiment in Germany and the anticipation of lower interest rates in the US positions the Euro for potential further gains in the near future.
