EUR/USD Battles 1.1200 Resistance After US PCE Inflation Data Release
EUR/USD approaches the 1.1200 mark following the release of US PCE inflation data.
FUNDAMENTAL OVERVIEW:
EUR/USD is nearing the 1.1200 level after the US inflation data came in generally weaker than expected. The pair is lacking momentum due to subdued European data, which has dampened demand for the Euro. However, optimism continues to pressure the USD.
The EUR/USD pair continues to face challenges in breaking through the 1.1200 level, attracting sellers on Friday and reversing some of the gains from the previous day. The US Dollar (USD) has edged higher due to repositioning ahead of the US Personal Consumption Expenditure (PCE) Price Index release, which has significantly impacted the currency pair. However, the USD’s upward movement has lost momentum due to expectations of more aggressive policy easing from the Federal Reserve (Fed), which should help mitigate any downside for the major pair.
Indications of a continued decline in inflationary pressures could lead to heightened market expectations for the Federal Reserve to further lower interest rates in the final quarter of this year. At present, financial markets appear optimistic that the Fed will implement a second consecutive rate cut in November, as inflation seems poised to return to the central bank’s 2% target and policymakers express concerns about increasing risks to labor demand. Nevertheless, traders are divided on the potential magnitude of the rate cut, with opinions varying between 25 and 50 basis points, according to the CME FedWatch tool.
Next week, investors will pay close attention to Fed Chair Jerome Powell’s speech on Monday, along with a series of labor market data and the ISM Purchasing Managers’ Index (PMI), as they seek to anticipate the next direction for the US Dollar.
Read More – Daily Technical Analysis
EUR/USD TECHNICAL ANALYSIS DAILY CHART:
Technical Overview:
EUR/USD is currently trading within an up channel.
EUR/USD is positioned above all the Moving Averages (SMA).
The Relative Strength Index (RSI) is in the Buying zone, while the Stochastic oscillator suggests a Positive trend.
Immediate Resistance level: 1.1203
Immediate support level: 1.1156
HOW TO TRADE EUR/USD
Since Tuesday, EUR/USD has fluctuated within a 100-pip range as investors look for fresh interest rate indications from the Fed and ECB. Today, it has surpassed a critical level, trading above the resistance zone with a slight pullback. As long as it remains above this level, EUR/USD could continue to rise towards the next significant hurdle.