EURUSD is moving in Ascending channel and market has reached higher high area of the channel
EUR/USD Stuck in a Tight Range: What to Expect This Week
The EUR/USD pair has been hovering near the 1.0750 mark, struggling to break out of a narrow trading range. In this article, we’ll delve into the factors influencing this currency pair, including recent European inflation data, upcoming economic reports, and key events to watch out for. Let’s break it down and see what’s going on.
Recent European Inflation Data: A Mixed Bag
EU CPI Inflation: Steady but Above Target
On Tuesday, the EU CPI inflation print showed that inflation remains a concern. The Core Harmonized Index of Consumer Prices (HICP) for June held steady at 2.9% month-over-month, matching the previous figure and defying expectations of a slight decline. The year-over-year HICP inflation eased slightly to 2.5%, as forecasted, down from 2.6%. However, these figures are still well above the European Central Bank’s (ECB) target of 2%.
This persistent inflation is a signal that the ECB might need to continue its tight monetary policy stance, potentially affecting the EUR/USD exchange rate. Higher inflation could lead to higher interest rates, which typically strengthens a currency. However, the ongoing economic uncertainties in the EU make it difficult for the EUR/USD pair to gain a clear direction.
Fedspeak and US Job Data: Shaping Market Sentiment
In the US, Federal Reserve officials have been vocal about the recent improvements in inflation data. This has boosted investor sentiment, as many hope for a potential rate cut. Additionally, the US JOLTS Job Openings report showed a slight increase in May, indicating a still robust labor market. The number of job openings rose to 8.14 million, up from the expected 7.91 million.
This mixed economic data creates a complex backdrop for the EUR/USD pair. While better-than-expected job data might support the US dollar, the possibility of a rate cut by the Fed could weaken it. Traders are closely watching these developments as they prepare for the key labor data release on Friday.
What’s on the Economic Calendar?
Wednesday: A Day Packed with Data
Wednesday is set to be a busy day with several important economic reports. In Europe, we’ll see the final Producer Price Index (PPI) and Purchasing Managers Index (PMI) figures. The pan-EU Composite PMI for June is expected to hold steady at 50.8, signaling modest economic expansion. Meanwhile, the annualized European PPI for May is forecasted to improve slightly to -4.1% year-over-year, up from -5.7%.
In the US, the ISM Services PMI and ADP Employment Change numbers will be closely watched. The ISM Services PMI for June is expected to cool to 52.5 from 53.8, indicating slower growth in the services sector. The ADP Employment Change report, a precursor to Friday’s Nonfarm Payrolls (NFP) data, is forecasted to show a slight increase in job gains, rising to 160K from 152K.
EURUSD is moving in box pattern and market has fallen from the resistance area of the pattern
Key Speeches and Reports
ECB President Christine Lagarde is scheduled to speak towards the end of the European trading session. Her comments could provide insights into the ECB’s policy outlook and potentially impact the EUR/USD pair. Additionally, the Federal Open Market Committee’s (FOMC) latest Meeting Minutes will be released later in the day, offering further clues on the Fed’s future monetary policy decisions.
As we move through the week, the EUR/USD pair remains in a tight range, influenced by a mix of economic data and central bank communications. The recent European inflation figures indicate that inflation is still a concern, which might keep the ECB on a hawkish path. On the other hand, US economic data presents a mixed picture, with solid job numbers but potential for a Fed rate cut if inflation continues to improve.
For traders, it’s crucial to stay updated on the latest economic reports and central bank statements. The packed economic calendar, including Wednesday’s PMI and PPI figures, as well as the ADP Employment Change report, will provide important insights. Furthermore, speeches from key policymakers like ECB President Christine Lagarde and the FOMC’s Meeting Minutes will offer additional context for making informed trading decisions.
In summary, the EUR/USD pair is navigating a landscape filled with economic uncertainties and central bank signals. Staying informed and flexible in your trading approach will be key to navigating this complex environment. Happy trading!
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