Last Friday, the EURUSD pair significantly moved when it surpassed the 1.08 level. This movement was primarily triggered by the latest labor market data from the U.S., which failed to meet market expectations. The disappointing data led investors to anticipate that the Federal Reserve might be more inclined to reduce interest rates at their next meeting in September, as a response to slowing economic growth. This change in expectations caused a notable shift in the currency markets, influencing the value of the dollar against the euro.
Meanwhile, over the past few days, the market's expectations for interest rate cuts in the Eurozone have moderated somewhat. Initially, there was a stronger sentiment for deeper rate cuts, but this shifted after the release of the inflation data for April. The inflation rates were slightly higher than what many economists had predicted, suggesting a somewhat more resilient price pressure within the Eurozone.
Despite this, statements from key ECB officials, like Philip Lane who was quoted today, indicate a strong commitment to beginning an easing cycle by June, affirming that the path to easing remains clear despite the recent data.
Looking ahead to this week, there are no major economic reports scheduled to be released from the United States. The next significant data, the Consumer Price Index (CPI) for inflation, is set to be released next Wednesday. The absence of major updates might lead to a weaker dollar as market participants have fewer data points to reassess their positions.
This environment could allow the EURUSD pair to regain strength and potentially exceed the 1.08 level once again. The technical analysis on the weekly charts supports this possibility, identifying the 1.0835-40 range as a key resistance area that traders will be watching closely.
06.05.2024
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