The upcoming release of the June Personal Consumption Expenditures (PCE) Price Index on Friday is highly anticipated, with expectations of a 0.1% increase. This key inflation gauge, favored by the Federal Reserve (Fed), will provide crucial insights into the US economy’s price pressures. The recent GDP data showed a strong growth rate of 2.8% in Q2, but inflation remains above the Fed’s 2% target.
What to Expect from the PCE Price Index
The core PCE Price Index is forecasted to rise by 0.1% MoM in June, aligning with the previous month’s figure. Additionally, the annual pace of growth is expected to be 2.5%, slightly below the previous estimate but still above the Fed’s target. These figures support Fed Chairman Jerome Powell’s dovish stance, increasing the likelihood of interest rate cuts.
Impact on EUR/USD Pair
The EUR/USD pair is currently on the verge of turning bearish, with technical indicators signaling a potential downtrend. If the PCE data confirms lower inflation pressures, the USD may face selling pressure, benefiting the EUR/USD pair. However, any unexpected rise in inflation could lead to a stronger USD and a decline in the pair’s value.
In summary, the upcoming PCE Price Index release will play a crucial role in shaping the Federal Reserve’s monetary policy stance and influencing currency market dynamics. Investors should closely monitor the data to make informed decisions regarding their financial portfolios.