21 May 2024, EUR/USD
EURUSD:
The Euro-dollar pair holds positive momentum near 1.0860 in the early European session on Monday. Investors will focus on the Fed Speaker's speech in the absence of key US data releases. Wednesday will center on European Central Bank (ECB) President Christine Lagarde's speech and minutes from the latest FOMC meeting. Federal Reserve (Fed) officials are confident that inflation is moving towards the 2% target following the release of the US inflation report last week. Fed Vice Chairman Philip Jefferson said on Monday that it is premature to say whether the recent slowdown in disinflation will be prolonged, emphasizing that he will carefully assess incoming economic data and the outlook. Meanwhile, Atlanta Fed Vice Chairman Michael Barr said disappointing first-quarter inflation data did not give the Fed the confidence to ease monetary policy.”
The U.S. central bank is expected to leave rates unchanged at its June meeting. Traders estimate the probability of a 25 basis point (bps) Fed rate cut in September and two rate cuts before the end of the year at 76%, according to CME FedWatch Tool data.
On the other hand, the European Central Bank (ECB) is expected to lower borrowing costs at its June meeting. ECB board member Isabelle Schnabel said the central bank may cut the rate in June, but warned against a further reduction in borrowing costs given the uncertain outlook. Analysts believe that the divergence in monetary policy between the ECB and the Fed could put pressure on the euro (EUR) and create a headwind for EUR/USD.
Trading recommendation: Watch the level of 1.0850, if it rebounds, take Buy positions. When fixing below, take Sell positions.
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