As the euro against the dollar breaks through the 1.10 mark, the dollar has fallen to its lowest point in seven months. Societe Generale's technical analyst Tanmay Purohit stated: "While this rise may seem a bit tentative, there are no signs of a pullback as of now. The 50-day moving average near 1.0880-1.0850 should be a key support level in the short term, and if there is a pullback, this area could provide support."
The weakening of the dollar is the main driver of the euro's strength against the dollar, with market expectations for significant rate cuts by the Federal Reserve growing in the coming months. The market broadly expects that the Fed may cut rates by up to 100 basis points this year. However, the potential downside risk for the euro against the dollar lies in the possibility that if the Fed's rate cuts fall short of expectations, the market could be disappointed.
From a technical analysis perspective, the downside space for the euro against the dollar at this critical juncture is relatively limited. Purohit pointed out: "The next upward targets for the euro against the dollar are between 1.1100-1.1140 and the high of 1.1275 in July 2023."
ING analyst Chris Turner believes that if the euro against the dollar breaks through 1.11, the upward trend may further accelerate.
As of 9:33 a.m. Beijing time on August 20, the euro against the dollar was quoted at 1.1083/84.
