📈Desk Buys EUR/USD Into FOMC: Cable FX Macro

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• Despite the weekly reduction, the euro remains heavily favored by speculators, with the +415,803 net long position being the largest among major currencies. This suggests confidence in euro strength but tempered by recent data or event risks.

• The European Central Bank (ECB) cut rates by 25 bp in June 2025, bringing its deposit rate to 3.25%. However, persistent Eurozone inflation (core at ~2.8%) and mixed PMI data (services strong, manufacturing weak) suggest a slower easing pace than the Fed, supporting relative euro strength.

• The bullish speculative bias supports a “buy on dips” strategy near 1.1000, but traders should watch Fed commentary on September 17 for clues on future cuts. A 50 bp cut (10% probability) could drive EUR/USD toward 1.1300, while no cut might trigger a pullback to 1.0900.

• Earlier on the session, an American desk was said to be short dollar vs euro. Strategists said this week is crucial for the pair to break out of its recent range. The desk also flagged risk on a potential tick higher in volatility if the Fed does not deliver current market dovish expectations.