EUR/USD Outlook: Key Data Eyed Amid Fading Fed Cut Expectations
During the early hours of Monday’s Asian trading session, the EUR/USD pair experienced a modest uptick, rebounding from multi-week lows of 1.0876 to hover around 1.0948, marking a 0.09% gain on the day.
Anticipation for Upcoming US Inflation Data
Investors are closely monitoring the upcoming US inflation data set for release on Thursday.
Expectations are set for the headline Consumer Price Index (CPI) to show a 3.2% year-on-year increase, while the Core CPI is projected to ease to 3.8%. This data will be pivotal in assessing inflationary pressures and influencing the Federal Reserve’s stance on rate adjustments.
US Labor Data Impact on Fed Expectations
Friday’s US labor market data injected skepticism into market expectations of an imminent Fed rate cut. The Nonfarm Payrolls (NFP) for December reported an increase of 216,000 jobs, surpassing the consensus of 170,000. This robust job growth casts doubt on the anticipated Fed rate cuts as early as March.
Eurozone Retail Sales and German Data in Focus
Investors are also turning their attention to the November Eurozone Retail Sales, forecasted to show a 0.3% month-on-month decline and a 1.5% annual decrease. These projections come after last week’s concerning German Retail Sales data, which indicated more pronounced contractions than expected. The German Trade Balance and Eurozone Retail Sales for November will be closely scrutinized for additional market insights.
Key US Economic Releases This Week
The market is poised for significant releases later in the week, including the US Consumer Price Index (CPI) on Thursday and the Producer Price Index (PPI) for December on Friday. These figures are expected to provide clearer direction for the EUR/USD pair’s movements.
EUR/USD Technical Analysis
The EUR/USD pair is exhibiting a bearish pattern, struggling to maintain a position above the 1.0960 level and facing downward pressure from the 50-day EMA.
The primary bearish target is set at 1.0860, with potential to extend towards 1.0765. However, a breach above 1.0960 could negate the bearish outlook and trigger a reversal towards an uptrend.
The expected trading range for today lies between 1.0850 support and 1.1000 resistance, with the overall trend leaning bearish.
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