EUR/USD saw some modest gains on Thursday, but the overall momentum remains stagnant as the pair trades near the 1.0700 level. With European economic data showing some softness, investors are now focusing on the upcoming US inflation data release. The US Personal Consumption Expenditure Price Index (PCE) inflation figure, expected on Friday, will likely have a significant impact on the market.
European economic indicators like the Economic Sentiment Indicator and German labor data have been mixed, with forecasts showing a slight increase in jobless benefits seekers. On the other hand, US Initial Jobless Claims came in better than expected, suggesting a positive trend in the labor market. The GDP figures also met expectations, indicating stable economic growth in the US. However, all eyes are now on the US PCE Price Index inflation data, which could pave the way for potential rate cuts by the Federal Reserve.
The Core Personal Consumption Expenditures Price Index, released by the US Bureau of Economic Analysis, is a crucial indicator for measuring inflation in the US. The upcoming MoM figure is expected to provide insights into the price pressures affecting the economy. A higher reading could be bullish for the US Dollar, while a lower reading may have a bearish impact.
In terms of technical analysis, EUR/USD is currently caught in a congestion trap, trading within a descending channel on the daily chart. The pair is hovering near the 1.0700 handle, showing signs of consolidation. The 200-hour Exponential Moving Average (EMA) at 1.0717 is acting as a key resistance level. On the hourly chart, EUR/USD is struggling to break above the 200-day EMA at 1.0785, indicating continued bearish pressure.
Factors influencing the Canadian Dollar (CAD) include interest rates set by the Bank of Canada, Oil prices, economic health, inflation, Trade Balance, and market sentiment. The BoC plays a crucial role in determining interest rates, which in turn affect the value of the CAD. Higher Oil prices usually lead to a stronger CAD, as Oil is Canada’s primary export. Inflation may have a positive impact on the CAD, as it attracts capital inflows and boosts demand for the currency. Macroeconomic data releases also influence the CAD, with a strong economy leading to a stronger currency.
Overall, the currency markets are closely watching the developments in the US inflation data and its potential impact on the Federal Reserve’s monetary policy decisions. As investors brace for the upcoming releases, including the PCE Price Index inflation figure, volatility in the forex market is expected to increase. Traders will closely monitor these economic indicators to make informed decisions on their trading strategies in the coming days.
