The Euro continued to strengthen throughout the overnight session, breaking out of its previous range to hold above 1.4750. The EURUSD rose for the second consecutive session as employment conditions improved in Germany.
Recent economic data points towards a weakening of real GDP growth in the euro zone economy and a more accommodative monetary policy could be needed to prevent the region from falling into a recession. Our trading recommendation is to sell EUR/USD at the market for 300 pips in profit potential with a stop in a daily close above 1.48.
Short term patterns indicate that the US dollar is likely to weaken on balance for the rest of the week.
Growth in the second quarter for the US economy is expected to have improved by 2.8%. An inline print would be significantly higher than the preliminary estimate of 1.9% and an improvement from the first quarter’s reading of 0.9%.
Currency Strategist
The Fed minutes released this passed week confirmed what the market has been pricing in for some months now: the next move in interest rates is likely to come in the form of a rate hike. However, for dollar traders, the operative question is not whether the policy board will hike or cut, but rather when.