The EUR/USD pair experienced a slight uptick on Friday, although it remained in negative territory for the week overall. Market sentiment has been primarily influenced by hopes of a rate cut by the Federal Reserve. Euro traders are also keeping a close eye on upcoming EU inflation data and the next Fed rate decision.
Looking ahead to the coming week, investors are eagerly waiting for the release of key pan-EU Harmonized Index of Consumer Prices (HICP) inflation figures. This data, scheduled for Wednesday, will provide valuable insights into the potential timing of another rate cut by the European Central Bank (ECB) following the 25 basis point cut that took place in June. Projections suggest that EU-wide headline HICP inflation for the year ending in July could ease to 2.3% from the previous 2.5% year-over-year.
On the US front, the Federal Reserve is set to announce its latest rate decision on Wednesday. While expectations are for rates to remain unchanged in July, investors will be closely monitoring any shifts in the Fed’s policy stance. Additionally, next Friday will see the release of US Nonfarm Payrolls data, a crucial factor in assessing the likelihood of a rate adjustment in September.
Despite signs pointing towards a potential uptick in inflationary pressures, the market ended the week without significant concerns. As a result, sentiment shifted towards riskier assets, with hopes for a rate cut in September still prevalent. The CME’s FedWatch Tool indicates that markets are pricing in a 100% likelihood of at least a 25-basis-point cut by September 18, with a 12% chance of a 50 basis points reduction.
Euro Price Performance This Week:
The Euro showed strength against major currencies this week, including the Australian Dollar. The heat map below illustrates the percentage changes of the Euro against various currencies.
EUR/USD Technical Analysis:
Despite a modest increase on Friday, the EUR/USD pair remains within a descending channel on daily candlesticks. While the overall trend favors buyers as the price holds above the 200-day Exponential Moving Average (EMA) at 1.0795, upside potential is limited as the pair struggles to surpass the 1.0950 level. With the last major swing low around 1.0700, there is increasing pressure from sellers to push the pair lower.
FAQs About the Euro:
The Euro serves as the currency for 20 European Union countries in the Eurozone and is the second most traded currency globally after the US Dollar. The European Central Bank (ECB) in Frankfurt, Germany, manages the Eurozone’s monetary policy. Key econometrics such as inflation data, GDP, and trade balance figures significantly impact the Euro’s performance. The ECB’s primary mandate is to maintain price stability, making it crucial to monitor economic indicators for the Eurozone’s largest economies.
Investing in financial markets carries risks, and individuals should conduct thorough research before making investment decisions. The views expressed in this article are those of the author and do not represent FXStreet’s official stance. The author has no financial interest in the mentioned assets at the time of writing.
In conclusion, the EUR/USD pair faces uncertainties as market sentiment remains influenced by central bank decisions and economic data releases. Investors should closely monitor upcoming events to gauge potential shifts in the currency pair’s performance.