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28/06/24
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EUR Seems Losing Ground
Around 6:00 a.m. (GMT) on June 28, EUR was somewhat losing its ground, with EUR/USD trading at 1.06902, representing a 0.12 percent decline. This comes after it remained near the 1.07 level over the past few days, looking for direction.
The eurozone inflation report for this month is expected to be released next week. Preliminary CPI readings for France and Italy, as well as Flash CPI readings for Spain will be released today.
According to forecasts, French inflation should rise to 2.5 percent year-over-year, relative to April’s 2.3 percent; it is expected to rise by 0.1 percent in June relative to May’s 0%, on monthly basis.
The European Central Bank (ECB) hopes to see inflation moving towards its 2 percent target, after the delivery of a rate cut a few weeks ago. The decision to deliver another cut will be based on inflation’s direction.
ECB policymakers have been concerned about a potential rebound in inflation after trimming rates. Hence, eurozone inflation rising in the readings next week would diminish hopes of another imminent rate cut, as the apex bank’s next meeting is scheduled for July 18.
The weekend may bring changes to the performance of the EUR, as voters in France vote in the first round of a parliamentary vote. President Macron had called the snap elections following the extreme right making steep gains in the latest elections in the European Parliament.
Macron’s plan to mobilize the center may backfire and the extreme right will gain ground, prompting uncertainty in France. In such a situation, the EUR and financial markets would suffer some blows. Hence, the EUR may experience some volatility on July 1 due to the election drama.
The United States final GDP readings came out as anticipated at 1.4 percent quarterly gains, somewhat higher than the 1.3 percent gain in the previous estimate. There was a significant slowdown in the U.S. economy in Q1, following a significant gain of 3.4 percent in Q4 2023. However, the Federal Reserve has not trimmed rates, as inflation remains high.
The chart of EUR/USD shows two barrier levels on the way upward, including 1.0710 and 1.0740. Conversely, there are two support levels on the way downward, including 1.0688 and 1.0658.
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