On August 12th, forex analyst James Skinner stated that the EUR/USD has consolidated its gains from early August in recent trading and may have the potential to decisively break through the resistance level around 1.0935 and approach the 1.10 level in the coming days.

The euro rebounded explosively against the US dollar on August 5th, when the US July employment data was significantly unexpected, leading the market to bet on multiple interest rate cuts before the end of the year.

Jane Foley, head of foreign exchange strategy at Rabobank, said last Friday, "We have cancelled the three-month target of 1.05 for the euro against the dollar, mainly because we believe that the upcoming interest rate cut by the Federal Reserve may prevent the euro from falling to this level this year. For now, if the euro falls to 1.10 against the dollar, we will continue to support selling the euro against the dollar

At present, the euro has fallen below 1.10 against the US dollar, trading around 1.0930.

Due to the bet on a 100 basis point interest rate cut by the Federal Reserve, the euro has begun to challenge the technical resistance level near 1.0935 against the US dollar, and may target the 1.10 level this week.

This is partly because polls show that Democratic presidential candidate Harris has a higher approval rating than Trump in some states, and also because the US July inflation data released last Wednesday may consolidate market expectations of an upcoming interest rate cut by the Federal Reserve.

Jane Foley, head of foreign exchange strategy at Rabobank, said, "From a 3 to 6-month perspective, we believe that a weakening of the US dollar rather than a strengthening of the euro could lead to a breakthrough in the euro. This could be due to the US economy being weaker than expected, or Harris winning the election, although our House forecast is based on Trump's victory

The market generally believes that the data released on Wednesday will show that the monthly core CPI rate for July in the United States will not be quarterly adjusted to 0.2%, and the annual CPI rate for July will not be quarterly adjusted to 2.9% from 3%. This keeps the anti inflation process in the United States intact and puts pressure on the US dollar, as it is loosely negatively correlated with inflation.

According to foreign exchange analyst James Skinner, the recent fluctuations in the US dollar exchange rate and the recent upward breakthrough of the euro against the US dollar indicate that the exchange rate may be on the brink of narrowing the gap between itself and fair value. The fair value of the euro against the US dollar increased from 1.1511 at the beginning of the year to 1.1577.

EUR/USD daily chart