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EUR/USD hesitates to break out despite weaker dollar and higher ECB odds
The article points to fading Fed hike expectations and rising chances of a September ECB move, but notes euro strength is not broadly confirming across other EUR crosses.
EUR/USD is poised for a potential rally, supported by a weaker dollar and shifting rate expectations, but it has not yet broken out because the euro is not confirming the move across other currency pairs, Action Forex reports.
The outlet cites data that reduced Fed tightening expectations after July payrolls contracted unexpectedly and July CPI showed core inflation back at 2.5%. In its view, the September Fed hold probability rose from about 45% a week earlier to roughly 60%, while the expected probability of a September ECB hike climbed above 90% from around 70% a month earlier, supported by a renewed oil surge.
Action Forex also argues that euro weakness does not appear driven by weak fundamentals, noting that the Eurozone PMI Composite strengthened for a second straight month in July, with Germany also showing improvement. Instead, it suggests the euro is not attracting broad demand, which makes a durable EUR/USD breakout harder even if dollar weakness continues.
The piece highlights key EUR crosses to watch, including EUR/GBP, EUR/AUD, and EUR/CAD, saying declines there would imply euro weakness is spreading. It also describes a technical base case that the broader decline from 1.2081 completed a three-wave correction at 1.1323, with bullish divergence in the daily MACD reinforcing that interpretation.
Latest closeEUR/USD 1.153 ▼0.2%