The EUR/USD exchange rate reached a high near 1.0890 on Tuesday, later settling around 1.0860 as investors anticipated new economic data releases. This movement reflects a cautious stance among Euro traders, especially ahead of the upcoming German Consumer Price Index (CPI) report and significant U.S. economic indicators.

Upcoming German CPI Data: Anticipated Decline in Inflation

Investors are gearing up for the release of the German CPI data for May, forecasted to drop to 0.2% month-over-month from 0.5%.

A decrease in CPI inflation across key European economies might prompt the European Central Bank (ECB) to consider a 0.25% rate cut at its next meeting in June. This potential ease in inflation could provide some breathing room for the Eurozone’s monetary policy.

U.S. Economic Indicators to Shape Fed’s Rate Decision

The focus also shifts to the U.S., where key economic reports such as the Gross Domestic Product (GDP) for Q1 and the Personal Consumption Expenditure (PCE) Price Index are due later in the week.

Initially, markets had anticipated multiple rate cuts from the Federal Reserve starting as early as March. However, expectations have now moderated to possibly just two rate cuts in 2024, with the first potentially in September, as investors recalibrate their forecasts based on evolving economic conditions.

Key U.S. Data Points to Consider

Anticipation builds for Thursday’s release of the U.S. annualized Q1 GDP, expected to slow to 1.3% from 1.6%. Additionally, Friday’s PCE Price Index inflation is projected to remain stable at 0.3% month-over-month.

These figures will be crucial in determining the short-term trajectory of the U.S. economy and the Federal Reserve’s response, thereby influencing the EUR/USD price dynamics.

Conclusion

This week is pivotal for the EUR/USD as traders digest key economic figures from both Europe and the U.S. The potential adjustments in monetary policy from both the ECB and the Fed based on these data will likely drive the next significant movements in the EUR/USD exchange rate.

EUR/USD Technical Outlook

The EUR/USD pair is currently trading at $1.08457, marking a decrease of 0.10%. Today’s trading revolves around the pivot point at $1.08579, which serves as a critical juncture for determining future price movements.

Key Technical Levels:

Immediate resistance for the pair is seen at $1.08800, with further resistance expected at $1.08942 and $1.09107. These levels will be essential to watch if the pair gains upward momentum.

On the support side, the currency faces its first major barrier at $1.08406. Additional support can be found at $1.08239 and $1.08039. A breach of these levels could intensify selling pressure.

Technical Indicators Insight:

The Relative Strength Index (RSI) stands at 46, suggesting a slight bearish bias in market sentiment.
The 50-day Exponential Moving Average (EMA) closely aligns with the current price at $1.08445, indicating a potential resistance point if the market attempts to rise.

Conclusion:

The market sentiment for EUR/USD remains bearish below the pivot point of $1.08579. However, a break above this level could pivot the trend towards a more bullish outlook.