August 09, 2023 12:58 PM

EUR/USD Expected to Climb Higher

EUR/USD Expected to Climb Higher

After beginning July trading at approximately 1.09, EUR/USD surged to the 1.12 level by mid-July before falling down to around 1.10. Mizuho Bank economists predict that the pair will trade with a significant topside in August.

The ECB's return to hawkishness will boost Euro purchasing

If the US continues to provide good data, the Dollar will be purchased as the investor's price in further rate rises this year, with EUR/USD expected to move with a hefty topside. 

Speculative long bets in IMM currency futures contracts continue to accumulate. Given this, if these bets are unwound, Euro selling might escalate, thus prudence is advised. 

The Jackson Hole symposium will take place from August 24-26, and investors should keep an eye on it for signals about the path of monetary policy for the remainder of the year. If the ECB reverts to a hawkish policy due to fears about an inflationary spiral, Euro purchasing will increase.