Trade of The Day – EUR/USD
Facts
- EURUSD is breaking upward from a descending price channel; as of 2:25 PM (GMT) on Friday, the pair trades at 1.1652.
- The pair held its decline at the 50-day Exponential Moving Average (EMA50), which currently stands near 1.159 on the daily timeframe.
- Inflation expectations, according to preliminary data from the University of Michigan, have declined significantly—both in the 1-year and 5-year outlooks.
- Donald Trump has suggested a potential early change at the helm of the Federal Reserve, while Bloomberg data shows a slight uptick in bets on faster rate cuts in the U.S. compared to the previous day.
- Fed’s Christopher Waller noted that the Fed could cut rates in six weeks but also sees no strong reason to delay a decision on a July rate cut.
Recommendation
Long position on EURUSD at market price
- Take Profit (TP): 1.182
- Stop Loss (SL): 1.155
Opinion
The euro-dollar pair is gradually reversing its short-term downtrend, breaking out of the descending price channel (see red diagonal lines on chart). This type of price behavior mirrors previous upward reversals observed at the turn of April/May and again in June.
Despite strong U.S. data, including yesterday’s retail sales, today’s housing report, and consumer sentiment data from the University of Michigan, investors now view a leadership change at the Fed as nearly inevitable. It may only be a matter of time before U.S. monetary policy undergoes a significant shift. Even if this change materializes as late as May 2026, the current year could still bring rate cuts.
Following soft CPI and PPI prints for June, and inflation expectations well below forecasts in the preliminary UoM survey, market participants may now believe that rate cuts will happen in 2025, possibly in a magnitude exceeding investor expectations.
University of Michigan Preliminary Inflation Expectations (July):
- 1-year outlook: 4.4% (Forecast: 5.0%, Previous: 5.0%)
- 5-year outlook: 3.6% (Forecast: 3.9%, Previous: 4.0%)
Additionally, Fed member Christopher Waller has signaled his openness to assume the Fed Chair role and indicated there is no reason to delay a rate cut in July. In this macroeconomic landscape, the EURUSD may find favorable conditions for further appreciation, especially as the Trump administration appears interested in influencing U.S. monetary policy—raising concerns about the Federal Reserve’s independence. We recommend entering a long position in EURUSD, targeting the recent local highs near 1.182. The stop-loss is set at 1.155, aligned with the recent swing lows and the vicinity of the 50-day moving average.

Source: xStation5