ECB, Fed Concerns Weigh on EUR/USD, Hits Monthly Low – Attention on EU GDP, US Inflation

The EUR/USD pair is trading around 1.0670, close to a five-week low, as traders wait for more market-moving events to confirm the latest bearish trend. Recent comments from a US General that eased fears of Chinese spying on the US may strengthen the market’s sentiment. However, dovish comments from ECB officials contrast with comparatively upbeat statements from Fed policymakers, keeping the EUR/USD sellers hopeful.

The upcoming key growth and inflation data from the Eurozone and the US will be crucial in shaping market sentiment. The majority of Fed governors and US diplomats appear hawkish for the Fed, but there remains a dilemma among policymakers. US inflation data will be important in determining market sentiment going forward.

The S&P 500 Futures have faded from the previous day’s corrective bounce, while the US dollar remains strong due to its safe-haven appeal. The cautious mood ahead of key economic data may weigh on the EUR/USD .

Philadelphia Federal Reserve President Patrick Harker recently stated that the Fed is not likely to cut rates this year but may be able to in 2024 if inflation starts to decrease. This is consistent with previous comments from Fed Chairman Jerome Powell and Richmond Federal Reserve President Thomas Barkin.

However, there is a dilemma among Fed policymakers, as the majority of governors and US diplomats, including President Joe Biden and Treasury Secretary Janet Yellen, have ruled out concerns of a US recession and appear hawkish for the Fed. This makes this week’s US inflation data particularly important.

EUR/USD Technical Outlook

The EUR/USD pair extended its decline, breaking below the 1.0745 level and facing consistent selling pressure from the EMA50. The next target is expected to be at 1.0635, indicating a continuation of the bearish trend. If this level is breached, the price could fall further to the next target of 1.0515, although temporary sideways movements may occur due to stochastic positivity. The formation of a negative pattern further confirms the bearish wave, which may reach the 1.0400 areas. The negative scenario will persist, but a breach of 1.0745 could lead to a new recovery attempt. The expected trading range for the day is between support at 1.0575 and resistance at 1.0745, with a bearish trend anticipated.