Daily Price Outlook
The EUR/USD is trading 0.05% higher at 1.0993. The currency pair maintained a narrow trading range over the past week, as investors seemed to establish a pricing equilibrium in anticipation of upcoming risk events on the calendar.
US Upcoming Data Takes Center Stage: Key Economic Indicators to Watch
The preliminary April S&P PMI figures from the United States, released on Friday, bolstered the case for the Federal Reserve to raise rates again last week. For the first time in six months, the Manufacturing PMI rose to 50.0. Moreover, the preliminary Services PMI increased to 53.7, surpassing expectations of 51.5 and the previous report of 52.6.
The encouraging data indicate that the US economy is rebounding robustly, and labor demand could significantly increase. As a result, the Fed may need to raise rates once more to address persistent inflation.
Currently, the Dollar Index (DXY) is trading at 101.74. Meanwhile, the EUR/USD struggles to reach 1.1000 as the USD Index attempts to recover.
On Tuesday, the week will kick off with consumer confidence data, followed by core durable goods orders on Wednesday, which will be closely watched.
On Thursday, Q1 GDP and unemployment claim data will be released. If this week's US economic figures come in stronger than anticipated, the Fed may consider raising interest rates in June.
German inflation, a risk factor for the week
French and German Flash PMI figures released last week showed mixed results. The French Flash Manufacturing PMI fell while the French Flash Services PMI rose in the prior month. The German Flash Manufacturing PMI also declined, but the German Flash Services PMI rose to 55.7 from 53.9 in March.
The mixed reports showing that industrial sectors failing and service sectors excelling raised the possibility for uncertainty in the EUR/USD pair.
Additionally, the ECB is under pressure to hike rates further due to the Eurozone economy's better-than-expected economic outlook. At their upcoming policy meeting on May 4, market investors anticipate the ECB to announce a 25bps
Looking forward, investors will be interested in the Ifo German Business Climate Index on Monday and the German GfK Consumer Sentiment on Tuesday. After the German economic data, investors will wait until Friday to see how April's preliminary inflation rates for France, Germany, and Spain will affect the market.
The outcome may depend on the GDP and inflation numbers released on Friday. The ECB may raise interest rates by 50 basis points if core inflation remains sticky. It would support the EUR/USD.
Daily Technical Levels:
Pivot Point: 1.0992
EUR/USD – Technical Outlook
The EUR/USD pair experienced minor negative movements yesterday, testing the EMA50 as the stochastic indicator displays a clear positive momentum, which is anticipated to encourage the price to continue its primary bullish trend, targeting 1.1030 as the next milestone.
Thus, our positive outlook will persist for the foreseeable future, keeping in mind that breaching the 1.0845 level could put pressure on the price to test the 1.0745 zone before making another attempt to rise. Today's projected trading range lies between 1.0800 support and 1.0970 resistance.
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