Learn To Trade Forex • Best Forex Trading Course • AsiaForexMentor

US Dollar Slide Boosts EUR/USD and GBP/USD

Written by:

Ezekiel Chew

Last updated on:

August 21, 2024

FOMC Minutes Awaited as Traders Anticipate Rate Cuts

Later today, the FOMC meeting minutes will be released, offering deeper insights into why the Federal Reserve maintained interest rates at 5.25%-5.5%. Since the July meeting, economic data has increasingly signaled a weakening US economy, leading to speculation that the Fed may begin cutting rates in September. Currently, financial markets suggest a 67.5% probability of a 25-basis point cut and a 32.5% probability of a 50-basis point cut.

With the market already pricing in today’s FOMC minutes, traders are now focused on Chair Powell's upcoming speech at the Jackson Hole Symposium on Friday. Powell is expected to address the economic conditions that could justify rate cuts starting in September. The markets are eager to see if Powell aligns with the current expectations of 100 basis points of cuts this year or if he will temper these expectations. Given that only three FOMC meetings remain this year, achieving 100 basis points of cuts would necessitate a 50bp reduction at one of these meetings.

Fed Implied Rates and Basis Points (Source: DailyFX)

US Dollar Index Plummets as Market Prices in a Dovish Fed

The US dollar index (DXY) has experienced a significant decline over the past two months as traders factor in a more dovish stance from the Fed. The technical outlook for DXY remains bearish, with two downward flag formations on the daily chart indicating continued pressure on the dollar.

US Dollar Daily Index as of August 21st, 2024 (Source: DailyFX)

Euro and Sterling Hit Multi-Month Highs

The weak dollar environment has propelled both EUR/USD and GBP/USD to new multi-month highs.

EUR/USD has rebounded strongly after hitting a five-month low of 1.0600 in mid-April. The recent bullish crossover of the 50-day and 200-day simple moving averages suggests further gains for the pair in the coming weeks.

EUR/USD Daily Chart as of August 21st, 2024 (Source: DailyFX)

The GBP/USD daily chart also appears optimistic, with a consistent series of higher lows and higher highs since late-April. Although Sterling has recently strengthened on its own, the future trajectory of the pair will largely depend on the US dollar's performance.

GBP/USD Daily Chart as of August 21st, 2024 (Source: DailyFX)

About Ezekiel Chew​

Ezekiel Chew, founder and head of training at Asia Forex Mentor, is a renowned forex expert, frequently invited to speak at major industry events. Known for his deep market insights, Ezekiel is one of the top traders committed to supporting the trading community. Making six figures per trade, he also trains traders working in banks, fund management, and prop trading firms.

Maximize Your Crypto Profit: Essential Strategies for Investors

Ever dreamed of turning a small crypto investment into something much bigger? Your starting investment, no matter how modest, can grow significantly with the right strategies and careful planning. In the exciting world of digital money, many people are making real gains. But simply buying a coin and hoping for

Read More

IMF: Trade Wars Harder on Developing Nations Than COVID

Here’s a surprising thought from the world’s top financial minds: Managing the economic fallout from trade wars might be a bigger headache for central banks in developing countries than dealing with the COVID pandemic was. That’s according to Gita Gopinath, a top official at the International Monetary Fund (IMF), speaking

Read More

Income Generation with Crypto Options: Strategies for Passive Returns

Options trading in the crypto market offers a fascinating avenue for passive returns, moving beyond traditional spot trading. While it involves unique risks, understanding crypto options can unlock powerful strategies for income generation on your digital assets. Crypto options are a specific type of derivative within the broader landscape of

Read More

US Dollar Slide Boosts EUR/USD and GBP/USD

Written by:

Updated:

August 21, 2024

FOMC Minutes Awaited as Traders Anticipate Rate Cuts

Later today, the FOMC meeting minutes will be released, offering deeper insights into why the Federal Reserve maintained interest rates at 5.25%-5.5%. Since the July meeting, economic data has increasingly signaled a weakening US economy, leading to speculation that the Fed may begin cutting rates in September. Currently, financial markets suggest a 67.5% probability of a 25-basis point cut and a 32.5% probability of a 50-basis point cut. With the market already pricing in today’s FOMC minutes, traders are now focused on Chair Powell's upcoming speech at the Jackson Hole Symposium on Friday. Powell is expected to address the economic conditions that could justify rate cuts starting in September. The markets are eager to see if Powell aligns with the current expectations of 100 basis points of cuts this year or if he will temper these expectations. Given that only three FOMC meetings remain this year, achieving 100 basis points of cuts would necessitate a 50bp reduction at one of these meetings.
Fed Implied Rates and Basis Points (Source: DailyFX)

US Dollar Index Plummets as Market Prices in a Dovish Fed

The US dollar index (DXY) has experienced a significant decline over the past two months as traders factor in a more dovish stance from the Fed. The technical outlook for DXY remains bearish, with two downward flag formations on the daily chart indicating continued pressure on the dollar.
US Dollar Daily Index as of August 21st, 2024 (Source: DailyFX)

Euro and Sterling Hit Multi-Month Highs

The weak dollar environment has propelled both EUR/USD and GBP/USD to new multi-month highs. EUR/USD has rebounded strongly after hitting a five-month low of 1.0600 in mid-April. The recent bullish crossover of the 50-day and 200-day simple moving averages suggests further gains for the pair in the coming weeks.
EUR/USD Daily Chart as of August 21st, 2024 (Source: DailyFX)
The GBP/USD daily chart also appears optimistic, with a consistent series of higher lows and higher highs since late-April. Although Sterling has recently strengthened on its own, the future trajectory of the pair will largely depend on the US dollar's performance.
GBP/USD Daily Chart as of August 21st, 2024 (Source: DailyFX)
ezekiel chew asiaforexmentor

About Ezekiel Chew

Ezekiel Chew, founder and head of training at Asia Forex Mentor, is a renowned forex expert, frequently invited to speak at major industry events. Known for his deep market insights, Ezekiel is one of the top traders committed to supporting the trading community. Making six figures per trade, he also trains traders working in banks, fund management, and prop trading firms.

RELATED ARTICLES











I consent to receiving emails and/or text message reminders for this event.

REGISTER FOR THE MASTERCLASS!

I consent to receiving emails and/or text message reminders for this event.

REGISTER FOR THE MASTERCLASS!


I consent to receiving emails and/or text message reminders for this event.

REGISTER FOR THE MASTERCLASS!