The Euro has depreciated for five consecutive days due to an unfavourable US-EU trade deal, which has led to negative implications for the Eurozone economy. As of now, the EUR\/USD pair remains on the defensive but has managed to bounce back from recent lows.<\/p>\n
In the European session, the Euro extended its decline but recouped slightly after testing new multi-week lows. However, selling pressure pushed the pair back down, which has been compounded by mounting criticism from European nations regarding the trade agreement.<\/p>\n
On the other side, the US Dollar has benefitted from recent agreements, apart from those with Canada and Mexico. Upcoming US economic data, including Consumer Confidence and JOLTs Job Openings, will be closely monitored, along with the Federal Reserve’s monetary policy decision and the Nonfarm Payrolls report.<\/p>\n
European survey data from the ECB suggests inflation trends remain subdued. Year-end CPI expectations have been revised down to 2.6%. The EUR\/USD faces potential resistance if it stays above 1.1555, but a bearish move below this support could target the 1.1500 level.<\/p>\n
Given the Euro’s persistent weakness, we believe any upward movement in the coming days presents a selling opportunity for traders. The pressure from the contentious trade agreement is unlikely to fade quickly, creating a fundamental headwind. The bounce from recent lows appears corrective rather than a reversal of the downtrend.<\/p>\n
The strength of the American currency is a key factor, and we are focused on this week’s data to confirm its momentum. With the Federal Reserve’s policy decision due tomorrow, July 30th, the market is pricing in a hawkish hold, reinforcing the “higher for longer” narrative that has supported yields. The latest JOLTs data, which showed a resilient 8.7 million job openings, further suggests the labour market can withstand current policy.<\/p>\n
In contrast, the European economic picture remains soft, limiting any potential for currency appreciation. The European Central Bank’s own survey data revising year-end inflation down to 2.6% gives policymakers plenty of room to remain dovish. This monetary policy divergence between a firm Fed and a cautious ECB is the primary driver of our bearish outlook on the pair.<\/p>\n
For derivatives traders, this sets up a clear play on volatility ahead of the central bank announcement and Friday’s Nonfarm Payrolls report. We see implied volatility on one-week EUR\/USD options climbing from 8% toward 10%, making long volatility strategies like straddles or strangles attractive. The potential for a sharp move following these key event risks is currently being underestimated by the market.<\/p>\n
We are positioning for a break of the critical 1.1555 support level mentioned. Buying put options with an expiration in early August, targeting strikes at or below 1.1500, offers a defined-risk way to profit from the expected decline. This strategy allows us to capture a potential drop following the upcoming high-impact news events.<\/p>\n
This setup is reminiscent of the policy divergence seen in 2022, which ultimately pushed the currency pair significantly lower over several months. While we must watch for any unexpectedly dovish commentary from the American monetary authorities, the path of least resistance appears to be downward. The weight of both fundamental and political factors is aligned against the single currency for now.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" Euro weakens for fifth day amid trade tensions; US Dollar gains as data and Fed decision loom.<\/p>\n","protected":false},"author":62,"featured_media":16965,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-27570","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/27570","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=27570"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/27570\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/16965"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=27570"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=27570"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=27570"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}