The US dollar is under pressure due to concerns about the Federal Reserve's independence and growing expectations of an imminent interest rate cut. Over the past two trading sessions, markets have mainly focused on the possibility of a leadership change at the Fed after the Wall Street Journal reported that US President Donald Trump is considering replacing Fed Chair Jerome Powell by September or October.
Additionally, a series of weaker-than-expected US economic data, especially Q1 GDP, have reinforced projections that the Fed may cut rates sooner than anticipated. Traders are now closely watching today’s core Personal Consumption Expenditures (PCE) price index release, the Fed’s preferred inflation gauge.
If the PCE data exceeds forecasts, it could justify maintaining the Fed’s tight monetary policy, strengthening the US dollar and pressuring EURUSD.
From a technical perspective, EURUSD is poised to retest the previously breached level of 1.1640. Another bearish signal for the currency pair is the S&P 500’s full recovery to its February all-time high. Historically, such rallies are often followed by a correction. Given the inverse correlation between equities and the US dollar, a weaker stock market would likely support the greenback.
The overall recommendation is to sell EURUSD.
Profits should be taken at the level of 1.1640. A Stop loss could be set at the level of 1.1750.
The volume of the opened position should be set in such a way that the potential loss (protected by the Stop loss) is no more than 1% of your deposit funds.
This content is for informational purposes only and is not intended to be investing advice.
