EUR/USD has been sort of confused, with both sides being in play, while other risk currencies have been bearish against the USD in the last two weeks.
EUR/USD has been sort of confused, with both sides being in play, while other risk currencies have been bearish against the USD in the last two weeks. This pair started the month near its lowest levels in two months, as it has experienced a steady decline throughout May, with the USD finding some bids. This month the bullish momentum resumed again, but buyers failed to keep the price above 1.10 after pushing it above that level shortly.
Statements from the Federal Reserve have sparked concerns in the market regarding the likelihood of lower interest rates in the largest global economy. Instead, it appears that borrowing costs are expected to rise further as Powell confirmed this week, unless inflation subsides.
Overall, these factors contribute to the current downward pressure on the EUR/USD pair. The CPI (consumer price index) numbers have been showing a slowdown in recent months, although the core PCE (Personal Consumption Expenditures) has been steady at around 3%. The Eurozone CPI report was released earlier this morning,
Eurozone CPI Inflation Report
- June preliminary CPI +5.5 vs +5.6% y/y expected
- May CPI was +6.1%
- Core CPI +5.4% vs +5.5% y/y expected
- Prior +5.3%
The good news here is that headline annual inflation has declined further on the month, even when accounting for the higher base effects in Germany. However, core inflation remains stubbornly high and that is also particularly evidenced when we saw the Spanish report earlier here. The euro might respond a little to the headline figure but don’t expect the ECB to relent whatsoever on their hawkish posture considering what we’re seeing in the core figure (in bold).
EUR/USD Live Chart
EUR/USD
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