The EUR/USD pair is experiencing slight falls as investors focus on the upcoming European Central Bank (ECB) policy meeting and US economic data. The ECB is expected to cut its Deposit Facility rate by 25 basis points, leading to caution and uncertainty in the market. Higher-than-expected inflation data in the Eurozone has raised expectations of persistent price pressures, prompting the ECB to maintain a data-dependent approach to interest rate cuts.
Additionally, the US Dollar index (DXY) is rebounding, causing the EUR/USD pair to edge down around 1.0880. This comes ahead of key US economic reports, including the ADP Employment Change and the ISM Services Purchasing Managers Index (PMI) data for May. A slower pace of hiring in the US could deepen concerns about normalizing labor market conditions, leading to increased expectations of a Fed rate cut in September. The release of the US Nonfarm Payrolls report will further influence market speculation about interest rate cuts.
From a technical analysis perspective, the EUR/USD pair is consolidating below 1.0900, with a near-term firm outlook due to a Symmetrical Triangle breakout and upward-sloping 50-day Exponential Moving Average (EMA). The pair is expected to extend its upside if it breaks above 1.0900 decisively, with potential resistance levels at 1.0950 and 1.1000. However, a downside move below the 200-day EMA at 1.0800 could lead to a bearish trajectory.
Investors will closely watch the ECB Press Conference following the policy decision for insights on monetary policy. The comments from the ECB President can influence the volatility of the Euro and determine short-term trends. A hawkish tone is bullish for the EUR, while a dovish tone typically leads to bearish trends. The ECB’s decision and subsequent press conference will have a significant impact on the EUR/USD pair and broader market sentiment.
