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2025-09-16 21:56:11
[A double whammy of negative factors roils the forex market? Beware of a "black swan" event for the US dollar] ⑴ Market sentiment is undergoing a subtle shift, with rising expectations of a Federal Reserve rate cut becoming a key driver of EUR/USD's gains. On Tuesday, the currency pair reached a two-month high. Despite strong US retail sales and industrial production data, traders quickly bought in, ignoring these positive economic signals. ⑵ Falling US Treasury yields have weakened the US dollar's yield advantage, with the two-year Treasury yield hitting a three-day low. Furthermore, the yield gap between US and German two-year Treasury bonds narrowed to its narrowest level in a year, further supporting the euro. Markets generally expect the Federal Reserve to prioritize supporting the job market through rate cuts. ⑶ Technical indicators are also showing bullish signals. Both the daily and monthly relative strength indexes (RSI) are trending higher, but have not yet entered overbought territory. The monthly chart shows that EUR/USD is nearing the completion of a bullish flag pattern. A successful breakout could lead to further gains towards the 1.30 mark. ⑷ As the market focus shifts to this week's Federal Reserve meeting, if Fed Chairman Powell releases dovish signals, it may significantly boost EUR/USD and accelerate the dollar's weakening trend.
