Spanish and Italian Services and Composite PMI data for July showed strength, while German data was revised. However, downward revisions in French PMI slightly impacted the Eurozone Services and Composite numbers from the previous month. June’s strong Industrial Production figures in France and Spain contribute to the general trend of positive surprises in Eurozone data. This is likely to support the euro, as there are expectations that the US Federal Reserve will match the European Central Bank’s easing policies.

Euro Stability And Potential

The euro is holding steady after its recent rally, staying close to the mid-1.15 level against the dollar. A bullish pattern indicates stability, with the euro potentially rising above the 1.16 resistance level, aiming for 1.17 or higher. The following content includes forward-looking statements with risks and uncertainties. The markets and instruments discussed are for informational purposes and are not trading recommendations. Always conduct thorough research before making any investment decisions. Any errors, losses, or emotional distress resulting from investments are the investor’s sole responsibility. This first week of August, the euro is solid against the dollar around the 1.15 level. This stability follows a recent rally, suggesting a period of consolidation. Traders should monitor this level closely as it might signal the next move. The recent strength is supported by positive economic data from the Eurozone last month. Strong services data from Spain and Italy, combined with solid industrial output in June from France and Spain, presents an encouraging picture. This trend of positive surprises is what gives the euro its support.

Inflation And Economic Trends

Last week’s flash estimate for July Eurozone inflation was 2.3%, slightly above expectations, easing pressure on the ECB to make immediate cuts. This is in contrast to the recent US jobs report, which showed a slowdown in hiring and wage growth for July. These developments suggest the Federal Reserve may need to ease policies more aggressively than the European Central Bank. This situation feels reminiscent of mid-2017 when Eurozone growth data began outpacing US forecasts. At that time, the EUR/USD pair broke out of a prolonged consolidation range, leading to a sustained upward trend. We could be witnessing the early stages of a similar pattern now, driven by similar fundamental changes. Given this outlook, derivative traders might want to consider positioning for euro strength in the coming weeks. Buying call options on the EUR/USD with strike prices at or above the 1.16 resistance level could be a smart strategy. This approach would allow traders to benefit from a potential breakout toward the 1.17 mark or higher. Create your live VT Markets account and start trading now.

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