EUR/USD Surges to Two-Month High Amid Fading Hike Expectations
The EUR/USD currency pair has reached a two-month high near 1.1590, surpassing its previous peak since mid-June. This significant move is not driven by the euro itself but rather by a broader dollar-driven trend.
The common driver behind this surge in various assets is a repricing of Federal Reserve expectations. The pair's advance can be attributed to fading hike expectations, which dominated late July markets. The 9-3 vote at the July meeting, where three policymakers preferred a quarter-point increase, has since unwound.
The FOMC minutes on Wednesday will test whether this repricing holds, and Jackson Hole's keynote address by Kevin Warsh on Friday will provide further insight into the Fed's stance. The symposium is significant due to its timing, 19 days before the September FOMC decision, and the chair's deliberate removal of forward guidance from post-meeting communication.
The EUR/USD technical analysis suggests that a daily close above 1.1600 would confirm the range break, with the next objective being the June swing-high zone at 1.1645-1.1650. The bullish scenario is strengthened if the FOMC minutes read as less concerned about inflation, euro-area flash PMIs hold up, and the pair sustains a daily close above 1.1600.