EUR/USD Approaches 1.09 Amid Inflation Data
The EUR/USD pair is witnessing a short-term uptrend within a broader downtrend. This upward movement is partly due to the weakening US dollar, driven by expectations of a Federal Reserve (Fed) policy shift based on softer economic data. However, no official confirmation of this shift has been provided by Fed officials.
On the other side, the European Central Bank (ECB) is likely to reduce interest rates by 25 basis points at its next meeting. This anticipated move is already factored into the market, but it remains unclear whether the ECB will commit to a full policy shift or adopt a cautious stance.
Upcoming Economic Data
The latter part of this week will see a flurry of significant economic data from both the US and EU, likely increasing EUR/USD volatility. Key indicators to watch include the US GDP and the Personal Consumption Expenditures (PCE) Price Index.
The upcoming US GDP and inflation data are critical. Any unexpected negative GDP data might accelerate the Fed’s policy shift to prevent a severe recession. Inflation remains a pivotal measure that cannot be overlooked.
In the Eurozone, inflation data expected on Friday will be crucial in influencing the ECB’s upcoming decisions, depending on whether it aligns with market expectations.
Technical Analysis
Currently, the EUR/USD chart shows an ongoing rise, targeting the resistance zone just above 1.09. For potential trend reversals, the support level at 1.08 is key. A break below this level might lead to further drops, with an immediate target at 1.0740.
