EURUSD Doesn’t Have Much to Run on, As ZEW Sentiment Slows!

EURUSD has been showing strong bullish momentum in July, but that’s likely to come to an end as the Eurozone economy keeps weakening. The ECB delivered a 25 bps rate cut in the last meeting, but they’ve been trying to keep a straight face and not commit to further rate cuts, but we all know that they’re coming. So, the bullish run has been on the back of the USD and now that the price has reached the upper side of the range, together with a slowing Eurozone economy as today’s ZEW economic sentiment showed, it points to a bearish reversal for this pair soon.

Last week the US CPI (Consumer Price Index) report showed that inflation remains on a slowing trend, raising odds for a July rate cut by the FED, which sent EUR/USD above 1.09. But, FED chairman Jerome Powell rejected a July rate cut by the FED, by not announcing it or giving some hints yesterday,  since this was his last appearance ahead of the blackout which starts on Friday.

EUR/USD Chart Daily – The Price Is Overbought s Stochastic Shows

EUR/USD Rebound Driven by US Economic Data

In June, market skepticism about a second Fed rate cut, coupled with concerns about European politics following the EU legislative elections, exerted downward pressure on the EUR/USD pair. However, this month has seen a complete turnaround, with the pair climbing above 1.09, pushed higher by some soft figures from the US, such as the miss in the NFP payrolls.

This shift is largely due to softer economic data from the US, including disappointing employment reports and lower CPI inflation figures. These data points indicate that the trend toward the Fed’s 2% CPI target continues, fueling expectations of a dovish monetary policy stance. As a result, the market sentiment has shifted, favoring the EUR and driving the EUR/USD pair higher.

Eurozone and German ZEW Economic Sentiment for July

EUR/USD Live Chart