EUR/USD: ECB's Inflation Outlook and USD Index Driving Market
EUR/USD: ECB's Inflation Outlook and USD Index Driving Market Sentiment
The EUR/USD pair maintains its strength above the key level of 1.1000 as the US Dollar continues its downward trajectory in anticipation of the US inflation data. The sustained weakness in the USD Index reinforces the market's belief that the Federal Reserve (Fed) is likely to announce only one more interest rate hike for the remainder of the year.
During the Asian session, the EUR/USD pair confidently surpassed the psychological resistance level of 1.1000. The pair remains on a bullish path, supported by the US Dollar Index (DXY) extending its losses and reaching 101.37 ahead of the release of the US Consumer Price Index (CPI).
The risk appetite theme is evident as S&P500 futures show marginal gains following a bullish Tuesday. Investors seem to have brushed off concerns surrounding upcoming corporate earnings and inflation data.
The USD Index has now experienced a four-day losing streak, indicating investor confidence in the expectation of only one more interest rate hike announcement from the Fed by the end of the year.
To gain further clarity, market participants eagerly await the release of inflation data. Analysts at ANZ anticipate a 0.3% month-on-month increase in both headline and core CPI inflation for June. However, such an outcome would still be considered high by the Fed's standards. While goods price inflation is expected to remain subdued and rent-based inflation may decrease further, the Fed would need to witness a slowdown in core services inflation excluding housing to be confident that overall inflation is on a sustainable path towards 2%. Achieving this would require further softening in labor market conditions and wage growth.
In the Eurozone, the final reading of German inflation reveals an annual price pressure of 6.8%, leaving the European Central Bank (ECB) with no choice but to consider further interest rate hikes. ECB President Christine Lagarde has already confirmed that additional rate hikes are necessary to address persistent inflation.
Regarding inflation guidance, ECB Governing Council member Francois Villeroy de Galhau stated on Tuesday that inflation is expected to continue its decline and return to 2% by 2025.
Pivot Point: 1.1005
Our preferred Scenario:
Long positions above 1.1005 with targets at 1.1040 & 1.1060.
The EUR/USD pair maintains its strength above the key level of 1.1000 as the US Dollar continues its downward trajectory in anticipation of the US inflation data. The sustained weakness in the USD Index reinforces the market's belief that the Federal Reserve (Fed) is likely to announce only one more interest rate hike for the remainder of the year.
During the Asian session, the EUR/USD pair confidently surpassed the psychological resistance level of 1.1000. The pair remains on a bullish path, supported by the US Dollar Index (DXY) extending its losses and reaching 101.37 ahead of the release of the US Consumer Price Index (CPI).
The risk appetite theme is evident as S&P500 futures show marginal gains following a bullish Tuesday. Investors seem to have brushed off concerns surrounding upcoming corporate earnings and inflation data.
The USD Index has now experienced a four-day losing streak, indicating investor confidence in the expectation of only one more interest rate hike announcement from the Fed by the end of the year.
To gain further clarity, market participants eagerly await the release of inflation data. Analysts at ANZ anticipate a 0.3% month-on-month increase in both headline and core CPI inflation for June. However, such an outcome would still be considered high by the Fed's standards. While goods price inflation is expected to remain subdued and rent-based inflation may decrease further, the Fed would need to witness a slowdown in core services inflation excluding housing to be confident that overall inflation is on a sustainable path towards 2%. Achieving this would require further softening in labor market conditions and wage growth.
In the Eurozone, the final reading of German inflation reveals an annual price pressure of 6.8%, leaving the European Central Bank (ECB) with no choice but to consider further interest rate hikes. ECB President Christine Lagarde has already confirmed that additional rate hikes are necessary to address persistent inflation.
Regarding inflation guidance, ECB Governing Council member Francois Villeroy de Galhau stated on Tuesday that inflation is expected to continue its decline and return to 2% by 2025.
Pivot Point: 1.1005
Our preferred Scenario:
Long positions above 1.1005 with targets at 1.1040 & 1.1060.
Comentarios:
Operación cerrada: objetivo alcanzado
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