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30/08/24
41
EUR/USD Range Bounded: Key Inflation Data Ahead
The EUR/USD currency pair remained trapped in a tight range below the 1.1100 level on Friday, following a two-day downward trend. Traders are particularly cautious, as a break below the critical support zone of 1.1050-1.1040 could signal further losses for the euro against the dollar. Market participants are closely monitoring the upcoming inflation data, specifically the Personal Consumption Expenditures (PCE) index for July.
Over the past few days, the EUR/USD has struggled to find direction, fluctuating within a narrow channel. The prevailing technical outlook continues to reflect a bearish sentiment among investors, with increased focus on important economic indicators. Positive economic data from the United States has contributed to the dollar’s recent recovery, causing the euro to weaken. Notably, the US Bureau of Economic Analysis reported an upward revision of the second quarter’s Gross Domestic Product (GDP) growth from 2.8% to 3%, alongside a slight decrease in unemployment claims.
In terms of Eurozone economic indicators, Eurostat is set to release the Harmonized Index of Consumer Prices (HICP) for August, though expectations remain muted due to recent soft inflation reports from Germany. This has resulted in some bearish momentum for the euro, potentially leaving investors disinterested in reacting to the HICP figures.
Later in the day, inflation data from the United States will be published, providing insight into consumer spending patterns. The core PCE Price Index is projected to increase by 0.2% month-over-month. Current market sentiment indicates a 33% chance of a significant Federal Reserve rate cut, and a stronger-than-expected increase in the core PCE could reinforce the dollar’s strength. Conversely, a lower reading may offer the euro a chance to recover against the dollar.
From a technical standpoint, the Relative Strength Index (RSI) on the four-hour chart indicates continued bearish pressure, remaining below 40. Key support levels are noted between 1.1050 and 1.1040, while immediate resistance sits at 1.1100, potentially influencing trading decisions in the upcoming sessions.
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