Traders take a cautious stance ahead of key data releases | 28 February 2024

Events to pay attention to today:

12:00 EET. EUR - Consumer Confidence

15:30 EET. USD - Gross Domestic Product

17:30 EET. USD - EIA Crude Oil Stocks Change

EURUSD:

During the Asian session on Wednesday, EUR/USD is losing ground near 1.0840 as traders adopt a cautious stance before the release of the Eurozone economic sentiment indicator for February and preliminary annualised gross domestic product (Q4) data from the US, scheduled for later in the day.

In December, the US house price index (m/m) rose by 0.1%, which is below both the expected 0.3% increase and the previous 0.4% increase. Furthermore, US Durable Goods Orders have fallen by 6.1%, which contradicts market expectations for a 4.5% decline and the previous 0.3% decline. The CME FedWatch Tool indicates that the probability of a rate cut in March has decreased to 1.0%. However, the probability of a rate cut in May and June is 21% and 49.8%, respectively.

Additionally, the euro (EUR) may benefit from recent comments made by European Central Bank (ECB) President Christine Lagarde on Monday. Lagarde noted that although inflation is steadily approaching the central bank's targets, the ECB intends to maintain current policy measures for the foreseeable future.

The March Gfk Consumer Confidence Index in Germany met expectations with a reading of -29, down from -29.6 in February. Later this week, attention will turn to German retail sales and consumer price index (CPI) data, which will provide a more comprehensive view of the economic situation.

Commerzbank economists highlight the significance of Friday's inflation data, but they do not see any noticeable trend indicating a weaker euro. However, Keith Jukes, chief global currency strategist at Société Générale, highlights the significance of which central bank cuts rates first or most aggressively - the Federal Reserve or the European Central Bank - in determining the direction of EUR/USD this year.

Trading recommendation: Trade in the narrow channel 1.0815-1.0860 on bounces from the levels

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