The EUR/USD pair saw a slight decline after the US Core CPI rose 0.3% MoM, reinforcing expectations of a 25 bps Fed rate cut. The European Central Bank (ECB) is also expected to cut rates by 25 bps this week due to slowing EU economic data and Germany’s inflation drop to 1.9% YoY. Despite this, the ECB’s post-September monetary policy decisions could become more complex as some inflation components remain stubbornly high.
The Euro ended Wednesday’s session with minimal losses against the Greenback, dropping 0.04% after the US inflation report showed that the core Consumer Price Index stalled in August. EUR/USD traded at 1.1014 after hitting a daily high of 1.1055. Wall Street finished the session on a positive note, while the Greenback remained firm due to the uptick in the US Core Consumer Price Index.
The decline in EUR/USD was also influenced by money market futures traders adjusting their bets for a Fed rate cut next week, with expectations shifting from 50 bps to 25 bps. Additionally, the upcoming ECB monetary policy decision added pressure on the pair, pushing it to a daily low of 1.1001 before bouncing back to the 1.1010-1.1020 range. The hawks within the ECB are expected to push back against the rate cut due to some sticky inflation components.
Looking ahead, the US economic docket will feature the release of the latest Initial Jobless Claims report and the Producer Price Index. The technical outlook for EUR/USD remains neutral, although it is above the 1.1000 level. If the pair rallies above 1.1054, it could move towards 1.1100, while a decline below 1.1000 would see support at the 50-day moving average at 1.0967.
The Euro was the strongest against the US Dollar in today’s trading session, with minimal changes against other major currencies. The heat map showing the percentage changes of major currencies against each other indicates that the Euro performed well against the Dollar, Pound, and Swiss Franc, among others. Overall, the Euro remains relatively stable compared to its counterparts in today’s trading session.
In conclusion, the EUR/USD pair experienced a slight decline following the US Core CPI report and expectations of a Fed rate cut. The upcoming ECB rate decision could add additional pressure to the Euro amid slowing economic data in the EU and Germany. While the technical outlook for EUR/USD remains neutral, the pair could see movement based on upcoming economic data releases and central bank decisions. The Euro performed well against the US Dollar in today’s trading session, indicating relative strength in the Eurozone economy.
