The EUR/USD pair has seen a significant surge this week, reaching a fresh 2024 high after softer-than-anticipated United States inflation figures were released. The momentum in the market has been positive, with the Euro gaining ground against the US Dollar. As the weekend approaches, the pair is holding steady around the 1.1000 mark.
Key Developments:
The release of US inflation-related figures led to a decline in demand for the USD. The US Producer Price Index (PPI) rose less than expected in July, with the core annual PPI also showing a decrease. This has raised expectations of a Fed rate cut in September, as easing inflationary pressures may prompt the central bank to adjust its monetary policy.
EUR/USD saw further gains following the release of the US Consumer Price Index (CPI), which showed a slight decrease in inflation rates. Despite the positive momentum in global equities, the USD was able to trim its losses as uncertainty remains about the size of the expected rate cut by the Fed.
European Economic Outlook:
The European Central Bank (ECB) has already implemented rate cuts and is expected to continue this trend in the coming months. However, concerns about a potential recession in Europe persist, with recent data pointing to a slowdown in economic growth. Germany’s ZEW Survey on Economic Sentiment and the EU’s Q2 GDP figures have both fallen short of expectations, indicating challenges ahead for the Eurozone.
What’s Next for EUR/USD?
In the upcoming week, the release of the Federal Open Market Committee (FOMC) meeting minutes and the preliminary estimates of the August Purchasing Managers Indexes (PMIs) will provide further insights into the economic landscape. Additionally, the Jackson Hole Economic Symposium will gather policymakers and economists to discuss the global economic outlook.
From a technical perspective, EUR/USD is poised for further gains, with key resistance levels at 1.1070 and 1.1140. In case of a pullback, support levels are at 1.0950 and 1.0890.