Key Points:
- EUR/USD Ascension: The currency pair approaches a crucial level of 1.0900, highlighting its fourth weekly gain and the best trading day of 2024.
- Impact of US CPI Data: Lower-than-expected inflation at 0.3% boosts hopes for a Fed rate cut, triggering a risk rally.
The EUR/USD currency pair has shown remarkable resilience and strength in the financial markets, climbing towards a key level of 1.0900. This ascent marked the single-best trading day of 2024, further solidifying its position with a fourth consecutive weekly gain. This performance highlights the current bullish sentiment for the Euro against the US Dollar, driven by economic indicators and events.
US CPI at 0.3%, Below Expectations of 0.4%
Recent data from the US economy indicated a lower-than-expected Consumer Price Index (CPI) inflation rate at 0.3% month-on-month, compared to the anticipated 0.4%. This easing of inflation has had significant implications, triggering a broad-market risk rally. Investors have interpreted these figures as a hopeful sign that might encourage the Federal Reserve to implement a rate cut. The lower inflation figures are crucial as they provide room for monetary policy adjustments, keenly watched by market participants.
EUR/USD: 70% Chance of US Rate Cut, EU GDP Steady at 0.3%
Market expectations are leaning heavily towards a potential rate cut by the US Federal Reserve, speculated to occur in September. The CME FedWatch Tool indicates a 70%+ likelihood of this action, highlighting a pivotal shift in monetary policy outlook. Meanwhile, Europe’s economic performance has been steady, with Q1 GDP growth aligning with forecasts at 0.3% quarter-on-quarter, mirroring the previous quarter’s growth rate. This stability in European growth further supports the strength seen in the Euro.
Upcoming Data Expected to Sway Market Sentiment
Looking ahead, the financial calendar highlights several mid-tier data releases scheduled across both sides of the Atlantic. Although these releases are expected to have a limited impact on the markets, they are essential for providing deeper insights into the ongoing economic conditions. They could sway investor sentiment and currency volatility in the short term.
EUR/USD Near 1.0900, EMA Support at 1.0730
From a technical standpoint, the EUR/USD pair is trading near a crucial level of 1.0900. The 200-hour EMA is rising at 1.0730, providing significant support as a notable technical indicator. On the resistance side, the pair faces a barrier near 1.0950. The currency has increased by approximately 2.7% since the April swing low near 1.0600, pushing past several technical thresholds, such as the 200-day EMA at 1.0798, achieved last Wednesday. This bullish pattern is framed by a descending pattern of lower highs, with the technical ceiling firmly set at 1.0950.
