EUR/USD Edges Up 0.02%, Focus on Powell’s Speech

Key points:

• EUR/USD is currently trading at 1.0788, showing a modest increase of +0.02%.
• Economic indicators reveal the Core PCE Price Index rises by +0.3% MoM; Yearly growth at +2.8%.
• Analysts eye Powell’s upcoming speech with rate cut odds at 66%.

The EUR/USD pair has shown a modest increment today, trading at 1.0788, representing a 0.02% change. This slight uptick in value mirrors the broader economic indicators and sentiments swirling through the market. As traders and investors decipher these signals, the underpinnings of these movements reveal much about the current economic landscape and future expectations.

Monthly PCE Gain at 0.3%, Inflation Eyes Fed Moves

The Core Personal Consumption Expenditure (PCE) Price Index, a closely watched measure of inflation, indicates a monthly increase of +0.3% and a yearly surge of +2.8%. Such figures, while modest, paint a picture of underlying inflationary pressures that could influence the Federal Reserve’s monetary policy decisions. Simultaneously, the headline PCE figures for February align with expectations, marking a +0.3% monthly change and a +2.5% yearly change. This steadiness suggests a market that, while cautiously optimistic, remains vigilant of inflation’s trajectory.

On another front, Wholesale Inventories Advanced for February saw a positive adjustment, climbing by +0.5%. This reversal from the previous month’s -0.2% drop hints at a resilient economic environment, potentially buoying the EUR/USD pair. Yet, the currency’s path is fraught with technical levels and psychological barriers.

EUR/USD Volatility, Resistance at 1.0800 SMA

Post-release of the economic data, EUR/USD showcased volatility, dipping below 1.0780 before surging above 1.0790. Technical analysis reveals immediate resistance at the 50-Simple Moving Average (SMA) around 1.0800. A decisive break above this level could open the gates to the March 28 high of 1.0827 and beyond, targeting key daily moving averages. Conversely, a slide below 1.0750 would test the pair’s resilience, with potential losses eyeing the February 14 low of 1.0694.

Market sentiment is heavily influenced by anticipation of future Federal Reserve moves. The speeches by Fed Chair Jerome Powell and San Francisco Fed President Mary Daly are critical events, with market participants gauging the likelihood of a June rate cut. The odds stand at 66%, a noticeable dip from the post-Federal Open Market Committee (FOMC) meeting high of 85%. This shift underscores the market’s sensitivity to the Federal Reserve’s tone and policy direction, which could significantly impact the EUR/USD pair’s trajectory.