Original title: against US DollarPress the "pause button" and investors wait for the event.

This week

Trading in the foreign exchange market as a whole is light. The euro held steady against the dollar on Friday, during which time the euro zone's initial composite PMI rose to 60.6 in July, the highest level since July 2000. However, the positive data did not give EURUSD much momentum. On the contrary, due to the strong trend of the dollar, it hit the $93 mark again during the day, making the euro against the dollar.

Under pressure.

Us Dollar: strong fundamental support, USD rally is expected to continue

Dollar indexIt is still very close to the recent high of 93.00, reversing a month of pessimism about US and global economic growth, which is a good performance. In the context of the global recovery, expectations of the Fed tightening policy are rising, while in the context of low risk sentiment, commodities

And emerging market currencies have been hit, both of which are good for the dollar's upside.

The US macro and interest rate strategy team of ING believes that US interest rates will turn higher later this year as the Fed is forced to deal with persistently high inflation. But for most people this year, when to raise US interest rates is clearly a challenge. Instead, the current focus remains on the outbreak of the Delta variant, especially in countries with low vaccination rates, where the only thing the government can do is to impose new blockades. The problem is very serious in emerging markets. It has led to a reversal of emerging market-related portfolios over the past month, supporting the dollar.

The current environment is unlikely to change dramatically in the short term, and as long as US business and consumer confidence remains strong and spending remains strong, the dollar looks set to continue to be supported.

For now, the market will focus on the Federal Open Market Committee (FOMC) interest rate decision next Wednesday.

Euro: ECB strategic review or pull down euro, optimistic PMI data fail to boost bulls

Many foreign exchange strategists see the ECB's strategic review as a means to weaken the euro. Dutch international analysts said that the average inflation target strategy adopted by the Federal Reserve and its impact on the dollar should play a big role for the ECB. Since September last year, a major weakness of the dollar has been a further decline in real interest rates in the United States, leading to higher inflation expectations in the market.

An important difference in the strategic assessment between the Fed and the ECB is that the ECB does not pursue an average inflation target. In other words, the ECB will not seek to raise its inflation target to make up for periods when inflation is below its target. This could mean that it will be difficult for the ECB to raise inflation expectations as the Fed did late last year and early this year. In other words, it may be difficult for the ECB to sharply lower real interest rates to prevent the euro from falling too much.

But changes in forward-looking guidance from the ECB will mean that euro interest rates will remain low for longer (1 million overnight index swap rates fell a few basis points yesterday in 2-3 years) and the euro will be seen as one of the preferred financing currencies. Of course, the euro showed no signs of bullish after yesterday's ECB interest rate decision.

IHS Markit the euro zone's initial composite PMI for July climbed to 60.6 from 59.5 in the previous month, the highest since July 2000. The index is above the 50 dividing line, which is also higher than the 60.0 expected by analysts. At the same time, the initial PMI of Germany's Markit manufacturing industry in July was also stronger than expected, reaching the highest level in nearly 25 years. However, the French data are somewhat disappointing and down from June, but overall business activity remains stable and at this level, so the pace of economic recovery is not expected to be much threatened from the third quarter. The euro zone as a whole showed a preference for PMI data, but the reaction between EURUSD and EURUSD was muted, with short-term fluctuations of less than 10:00.

"the euro zone is enjoying rapid economic growth in the summer," said Chris Williamson, chief business economist at IHS Markit. "the relaxation of anti-epidemic restrictions in July pushed the economy to grow at its fastest pace in 21 years, especially in the service sector, which is enjoying the freedom brought about by deregulation and increased vaccination rates, especially in hospitality, travel and tourism."

Investors have quickly shifted their focus to next week's Fed meeting, so

EURUSD

The room for large fluctuations is quite limited.

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EURUSD

Daily line chart)

July 23, Beijing time

EURUSD

报1.1772/74。