Euro: Benefits from US Dollar weakness – DBS
Chang Wei Liang at DBS Group Research highlights that EUR/USD has rallied toward 1.17, with the Euro the main beneficiary of Dollar softness.
DBS Group Research analyst Chang Wei Liang identifies the Euro as the primary beneficiary of a weakened US Dollar. July Eurozone Consumer Price Index (CPI) data met expectations for both headline and core inflation, bolstering confidence in a European Central Bank rate increase in September. Analysts price a 26 basis point hike with over 90% probability.
Meanwhile, the Federal Reserve's upcoming rate decision is uncertain due to recent economic data weakness and upcoming mid-term elections in November. Meanwhile, GBP/USD approaches a May high of 1.3650, while USD faces further downside amid assessments of the US Treasury's buyback program. Attention shifts to US economic data and Middle East headlines for further trading indicators.
EUR/USD reached a three-month high above 1.1700 as the US Dollar continued its decline, fueled by the Treasury's bond buyback plan. US Jobless Claims data and lingering Iran tensions will be closely monitored. Gold faces modest losses and trades below $4,500. Despite geopolitical risks, the US Dollar loses more ground, slipping to a three-month low.
Bitcoin gains momentum, inching closer to $72,000 as increased liquidity from the Treasury's larger debt buyback operations stimulates the crypto market. The US Treasury announced a significant increase in liquidity support buyback operations, expanding the maximum from $2 billion to at least $4 billion for 10-year to 20-year and 20-year to 30-year bonds, effective September 9 and lasting until November 4.
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