The EUR/USD currency pair has jumped up over 1.1750. This significant increase follows the European Central Bank’s (ECB) recent monetary policy initiatives and the recent release of key US consumer price index (CPI) data. In the American trading session, EUR/USD pushed higher, trading back above 1.1700, finding some of its recent momentum on continued US dollar weakness. This upward movement reflects a shift in market sentiment after the ECB opted to maintain its current policy settings, impacting the euro’s strength against the dollar.
The current upside recovery of the EUR/USD pair may be explained with economic fundamentals. In particular, our US inflation figures have surprised meaningfully to the upside this week, with goods inflation posting its biggest monthly increase since January. In August, the core services index soared by 0.35%. Driving this uptick was a bounce back in travel-related prices and owners’ equivalent rent. Core prices (excluding food and energy) were up 0.346%, adding additional pressure to this market dynamic.
Meanwhile, as the dog days of August continue to roll by, the Fed is already preparing for its next meeting. Cut expectations imply at least a 25 bps cut next week with analysts expecting 75 basis points total by year end. This prospect has further fueled the decline of the US dollar, providing room for the euro to gain strength.
On the ground, the labor market is exhibiting signs of strain, particularly with downside risks rising dramatically over past months. Analysts now point out that increasing tariffs are contributing to rising goods inflation. They think the effect on services inflation could be limited by a cooling labor market and a shift in consumer spending away from services.
In this light, EUR/USD price action is being watched most closely by traders around the world. They look for brokers that offer competitive spreads and fast execution. They’re looking for strong trading platforms to capitalize on expected changes in currency values.
Retail traders are always shopping around for the best brokers to trade EUR/USD with. They’re particularly attuned to this as they prepare for rapidly coming market changes starting in 2025. The top brokers will likely provide essential tools for executing trades effectively while navigating the complexities of foreign exchange markets.
“Real-time quotes can be affected by volatility.” – Wells Fargo Investments, LLC
The latest economic environment has raised questions about the merits of different trading strategies. Examples include traders placing orders with the market, for example “Good Til Canceled (GTC),” which means keep the order active until it is matched or manually canceled. Other order types are “Day Orders,” which are automatically canceled at the end of the trading day. Then there’s “Fill or Kill” or “All or None,” which require immediate, full execution—or none at all.
The current market environment has shined a light on the dangers of trading during volatile periods. Traders are urged to consider that “fast market conditions can affect your trades regardless of whether they are placed with an agent, over the internet or on a touch tone telephone system.”
If you or your team are intimidated by the prospect of charting a course through these dynamic new landscapes, reach out to us. Consider speaking with the professionals at 1-800-TRADERS to find out more!