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EUR/USD rises to an eight-week high near 1.1588

The move is tied to dollar weakness after softer US consumer sentiment and lower growth forecasts, while short-term inflation expectations edged higher.

Reported · Written up by our desk · Major Pairs

EUR/USD began the week around 1.1588 and climbed to its highest level in eight weeks, as the euro gained on dollar weakness following fresh US economic data that renewed doubts about the US economy’s stability and cooled expectations of imminent Federal Reserve tightening, according to Action Forex.

The University of Michigan’s preliminary consumer sentiment index fell to 51.0 in August from 54.2 in July and also came in below the 55.2 forecast. The report showed the current conditions component dropping to 51.8 from 54.8 and the expectations component falling to 50.6 from 55.4, while short-term inflation expectations rose to 4.3% from 4.2% and five-year expectations remained steady at 3.3%.

The source said growth outlooks have also weakened, with the Atlanta Fed’s GDPNow lowering its Q3 growth forecast to 4.3% from 5.8%, while the New York Fed’s Nowcast estimated growth at about 2.1%. It described the setup for EUR/USD as moderately positive but said the pair’s next move will hinge on new signals for both the US economy and Fed policy.

On the technical side, the analysis pointed to a consolidation range forming around 1.1561 on the H4 chart, with an upside breakout seen potentially lifting the pair to 1.1594 before a drop toward 1.1500, while a downside break could target 1.1400 and then 1.1260. On the H1 chart, it said the market completed a growth wave to 1.1555 and expects range expansion toward 1.1594, followed by a pullback to 1.1500 and possibly down to 1.1400.

Latest closeEUR/USD 1.157 ▲0.4%

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