EUR/USD Suffers Heavy Losses Amid Strengthening US Dollar
On Thursday, the EUR/USD currency pair experienced significant losses as the US Dollar continued to strengthen against other currencies, supported by strong macroeconomic data releases. As a result, the pair traded below the 1.0900 level early on Friday, with cautious investors remaining on the sidelines as they awaited crucial inflation data.
The Core Harmonized Index of Consumer Prices (HICP) in the Eurozone is expected to show a substantial increase of 0.7% in June, compared to the 0.2% rise observed in May. This projected growth in HICP aligns with the recent high inflation figures reported by Spain and Germany earlier in the week. Consequently, if the actual increase falls below the forecasted figure, the Euro may continue to weaken. However, a significant positive surprise in the monthly Core HICP would be required for the Euro to rebound convincingly.
Later in the day, the US economic docket will feature the release of the Personal Consumption Expenditures (PCE) Price Index, which is the Federal Reserve's preferred indicator of inflation.
In recent developments, the US Bureau of Economic Analysis revised the annualized Gross Domestic Product (GDP) growth for the first quarter from 1.3% to 2%. Additionally, the number of initial jobless claims declined by nearly 30,000. These data points highlight the resilience of the US economy and may reinforce the Federal Reserve's focus on controlling inflation. According to the CME Group FedWatch Tool, the current market pricing suggests a probability of less than 40% for the Fed to raise the policy rate by a total of 50 basis points throughout the remainder of the year. Therefore, if the monthly Core PCE Price Index reports an increase of 0.5% or higher, it could generate expectations of a more hawkish stance from the Fed and provide a boost to the US Dollar.
Taking into account the aforementioned factors, there is a bearish setup in play for the EUR/USD pair, with a key resistance level at 1.085. It is possible that the price may reach 1.075 or even dip below that level.
The Core Harmonized Index of Consumer Prices (HICP) in the Eurozone is expected to show a substantial increase of 0.7% in June, compared to the 0.2% rise observed in May. This projected growth in HICP aligns with the recent high inflation figures reported by Spain and Germany earlier in the week. Consequently, if the actual increase falls below the forecasted figure, the Euro may continue to weaken. However, a significant positive surprise in the monthly Core HICP would be required for the Euro to rebound convincingly.
Later in the day, the US economic docket will feature the release of the Personal Consumption Expenditures (PCE) Price Index, which is the Federal Reserve's preferred indicator of inflation.
In recent developments, the US Bureau of Economic Analysis revised the annualized Gross Domestic Product (GDP) growth for the first quarter from 1.3% to 2%. Additionally, the number of initial jobless claims declined by nearly 30,000. These data points highlight the resilience of the US economy and may reinforce the Federal Reserve's focus on controlling inflation. According to the CME Group FedWatch Tool, the current market pricing suggests a probability of less than 40% for the Fed to raise the policy rate by a total of 50 basis points throughout the remainder of the year. Therefore, if the monthly Core PCE Price Index reports an increase of 0.5% or higher, it could generate expectations of a more hawkish stance from the Fed and provide a boost to the US Dollar.
Taking into account the aforementioned factors, there is a bearish setup in play for the EUR/USD pair, with a key resistance level at 1.085. It is possible that the price may reach 1.075 or even dip below that level.
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