Noor Trends News, Technical Analysis, Educational Tools and Recommendations
The EUR/USD is struggling to maintain gains above 1.0700 amid uncertainty ahead of key economic events, including the release of Eurozone’s CPI, Q1 GDP, and the Fed’s policy outlook. The European Central Bank is expected to start reducing key borrowing rates in June, with the release of preliminary data on the Eurozone’s GDP and CPI expected on Tuesday. This will influence speculation about interest rate cuts by the ECB.
Economists have been speculating that the ECB will start cutting its Main Refinancing Operations Rate from the June meeting, as policymakers see them as reasonable. Banque de France Governor and ECB Council member François Villeroy de Galhau said last week that there is no need to wait much longer to start interest rate cuts if other things remain constant.
However, there is uncertainty over whether the ECB will extend the rate-tightening campaign, with different opinions on whether a June interest rate cut should be followed up by a series of rate cuts.
German preliminary inflation data for April remains mixed, with the annual Harmonized Index of Consumer Prices (HICP) growing at a higher pace of 2.4% from expectations and the prior reading of 2.3%. The monthly HICP rose steadily by 0.6%, while the annual core CPI that strips off volatile food and energy prices grew steadily by 2.2%. Economists forecasted the underlying inflation to grow at a higher pace of 2.3%.
The next move in the US Dollar will be guided by the Fed’s monetary policy decision, which will be announced on Wednesday. The Fed is widely anticipated to keep interest rates steady in the range of 5.25%-5.50%, and investors will focus on the Fed’s guidance for interest rates. The Fed has no option but to deliver hawkish guidance on interest rates, considering the hot Q1 GDP Price Index and higher-than-expected US core Personal Consumption Expenditure Price Index (PCE) data for March.
The EUR/USD pair is trying to establish firm footing above the 1.0700 hurdle, but the near-term outlook is still uncertain. The 20-day Exponential Moving Average (EMA) near 1.0720 remains a major barricade for the Euro bulls, while the 200-day EMA near 1.0800 is declining, suggesting that the long-term appeal is bearish. The 14-period Relative Strength Index (RSI) shifts into the 40.00-60.00 range, indicating a consolidation ahead.
