EUR/USD Forecast: Euro Rallies Against Dollar on Wednesday – 05 September 2024

-- It’s easy to see that this asset is strengthening, as we have bounce significantly from the 1.1050 level to reach the crucial 1.11 level.
-- This is an area that’s been important multiple times, and if we can break above there then it might open up the possibility of a move to the 1.20 level above, an area that did cause a significant amount of resistance previously.

Ultimately, the EUR/USD currency pair being driven by the Federal Reserve an interest rate policy expectations out of the United States. While this is in exactly a major newsflash, the reality is that the market will continue to see a lot of noise coming out of the Fed Funds Futures markets, as they are suggesting that the Federal Reserve could cut as much as 2.25% by the end of next year. The question of course is whether or not they will, and perhaps more importantly at this point in time - Why exactly would they do that?

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Could bad news suddenly derailed this rally?

At this point in time, one of the biggest fears is that there’s enough bad news coming out of the United States that people go running to the treasury market, in order to save their account. If that’s going to be the case, then it’s very likely that we would have a scenario where the US dollar would strengthen, despite the fact that there would be a lot of concerns about the US economy. Quite frankly, if the US economy starts to falter, the rest of the world gets crushed.

Ultimately, this is a market that I think is going to continue to be noisy, and in the short term probably continues to Rally. However, I don’t know how sustainable this rally is for the longer-term, so keep that in mind. The 1.1250 level above is a massive resistance barrier that people will be watching very closely. Anything above there could send the US dollar plummeting against almost everything around the world.

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