29 May 2024, EUR/USD
Event to watch out for today:
21:00 GMT+3. USD - Publication of the Fed's Beige Book economic survey by region
EURUSD:
The Euro-dollar pair rose to an intraday high near 1.0890 on Tuesday before market flows pushed the pair back to familiar levels near 1.0860. The pair is holding steady as Euro traders await fresh German consumer price index inflation data. Key US data is just around the corner with Gross Domestic Product (GDP) and Personal Consumption Expenditure (PCE) inflation due out on Thursday and Friday respectively.
German CPI inflation is expected to decline to 0.2% m/m in May from the previous reading of 0.5%. Investors are hoping that CPI inflation in key European countries will turn around and continue to decline to push the European Central Bank (ECB) to cut rates by a quarter point during the central bank's upcoming June meeting.
U.S. investors are having an uphill battle trying to determine when the Federal Reserve (Fed) will cut rates for the first time. Back in December, markets were predicting up to six rate cuts of at least 25 basis points each, with the first quarter-point rate cut expected in March. Today, markets are pricing in a roughly equal chance of a quarter-point rate cut in September, and hopes for two rate cuts in 2024 are fading.
Annualized U.S. gross domestic product (GDP) for the first quarter, to be released on Thursday, is forecast to fall to 1.3% from a previous reading of 1.6%. US PCE inflation is expected to be unchanged at 0.3% m/m on Friday.
Trading recommendation: Trade in the channel 1.0840-1.0890 on a rebound from the levels.
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