EUR – The situation in the Middle East has heated up sharply, and the U.S. dollar has also benefited from it and risen

Although China and the United States reached a highly anticipated trade framework agreement last week, the foreign exchange market's reaction was limited due to the lack of details in the agreement; and the latest CPI and PPI data released by the United States later showed that inflation has cooled, which has increased market speculation that the Federal Reserve will cut interest rates in September, and the US dollar has come under pressure again. The market generally believes that the Federal Reserve will keep the federal funds rate unchanged at 4.25%-4.50% this week. Interest rate futures traders believe that the Federal Reserve will cut interest rates by 25 basis points in September and may cut interest rates again in October. By last Friday, geopolitical risks became the focus. Israel announced that it had launched an attack on Iran, and safe-haven demand pushed the U.S. dollar, Swiss franc and Japanese yen all up.

The euro rose significantly against the U.S. dollar last week, hitting its highest level since October 2021 at 1.1632 on Thursday, and has risen by more than 11% so far this year. The euro has recently received support from the hawkish European Central Bank, which hinted that its one-year easing cycle will be suspended after inflation finally returns to the 2% target.

As the U.S. dollar has weakened in recent months, the euro has also broken through resistance and then pulled back to test the high of 1.1630. The current support level is 1.1480 and 1.1450, with the target upward of 1.1720 and the stop loss boundary of 1.1320.

Forecast range:
Resistance 1.1630 - 1.1720 – 1.1800
Support 1.1480 – 1.1450 – 1.1320*

Focus:
Monday:
Germany's June ZEW Business Sentiment Index (17:00)
Eurozone's first quarter labor costs and wages (17:00)
Wednesday:
Eurozone's April current account balance (16:00)
Eurozone's May HICP final value (17:00)

Friday:
Germany's May PPI (14:00)
Eurozone's June consumer confidence index preliminary value (22:00)

Any questions? contact our professional analysis team