- EUR/USD consolidates above two-week low as US core PCE Price Index for June looms.
- Annual US core PCE inflation expected to slow to 2.5%.
- Euro under pressure from various challenges.
EUR/USD is trading near 1.0825 in the European session, as investors await the US core Personal Consumption Expenditures price index data for June at 12:30 GMT. Economists predict a decline in annual inflation to 2.5%, which could impact market expectations for Fed rate cuts. A weaker inflation report may strengthen expectations for rate cuts in September.
Investors are cautious about the impact of inflation on Fed’s interest rate decision. The Fed is likely to keep rates steady at the July 31 meeting. Meanwhile, the Euro faces headwinds, with Germany’s economic outlook dimming due to a contraction in PMI data.
EUR/USD Holds Support Amid Uncertainty
- EUR/USD remains above key support at 1.0825, but concerns about Eurozone’s economic prospects persist. PMI data shows a decline in business activity, especially in manufacturing.
- Expectations of ECB rate cuts weigh on the Euro, with some policymakers hinting at further cuts. German government’s tax relief measures indicate concerns over weak demand.
- The upcoming Eurozone inflation data will provide insights into ECB’s rate decisions, with traders expecting policy easing in September.
Technical Analysis: EUR/USD in Symmetrical Triangle
EUR/USD is trading within a Symmetrical Triangle pattern, with downside potential towards 1.0800 and 1.0700. The RSI suggests fading bullish momentum, with resistance at 1.0900.
Euro FAQs: Understanding the Euro’s Impact
- The Euro is the currency for 20 EU countries, accounting for 31% of all FX transactions.
- ECB manages monetary policy to maintain price stability, impacting the Euro’s value.
- Eurozone inflation data and economic indicators influence the Euro’s direction.
- Trade Balance also affects the Euro’s value, with positive balances strengthening the currency.
Overall, the US core PCE Price Index data and ECB rate decisions will shape EUR/USD’s movement. Understanding these factors can help investors navigate the volatile currency markets and make informed decisions.