EUR/USD climbed to its highest level in a month at 1.0368 on Wednesday. A sustained break above the 1.0360 area would clear the way towards June 27 high near 1.0615, economists at BBH report.
ECB tightening expectations have stabilized
“The euro rally yesterday ran out of steam near 1.0360, which is the 62% retracement objective of the June-July drop. It is testing that level again today and a clean break above would set up a test of the June 27 high near 1.0615.”
“WIRP suggests a 50 bps hike is nearly 90% priced in for September 8. The swaps market is pricing in 125-150 bps of tightening over the next 12 months that would see the deposit rate peak between 1.25-1.50%, steady from the start of this week but up from 125 bps at the start of last week.”
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EUR/USD defends 1.0700 amid weaker US Dollar, EU data eyed
EUR/USD is trading modestly flat above 1.0700, finding support from a broad US Dollar weakness and the hawkish ECB expectations ahead of the mid-tier EU data this Tuesday. The market mood remains cautious, limiting the upside in the major.
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GBP/USD started the week off by dropping below 1.24, approaching a two-month low of 1.2306 reached on May 25th, as investors perceive a narrowing interest rate gap between the US and the UK. However, the Pound recovered those losses on the back of the weaker US dollar and data that put the Fed back into the spotlight on a dovish tip.
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