06 February 2024, EUR/USD
Event to watch out for today:
12:00 EET. EUR - Retail Sales m/m
EURUSD:
The EUR/USD pair is hovering around 1.0750 during the Asian session on Tuesday after declining in the previous session. The drop in the EUR/USD pair was due to the aggressive remarks made by US Federal Reserve Chairman Jerome Powell, as well as the improved data on the index of business activity in the services sector.
The US ISM Services PMI recorded a reading of 53.4 in January, surpassing the expected reading of 52.0 and the 50.5 recorded in the previous month. Furthermore, the ISM Services Employment Index increased to 50.5 from 43.8.
Federal Reserve Chairman Jerome Powell stressed the significance of closely monitoring inflation's steady trajectory towards the underlying 2% target. This position resulted in a rise in US Treasury bond yields, which exerted downward pressure on EUR/USD. The market response demonstrated increased confidence in the strength of the US dollar due to indications of a less accommodative monetary policy by the Federal Reserve.
Furthermore, the Euro (EUR) came under additional downward pressure after weak Producer Price Index (PPI) data was published in Europe on Monday. The European Union (EU) is currently experiencing a disinflationary trend, which may prompt the European Central Bank (ECB) to consider easing its policy. According to the Organisation for Economic Co-operation and Development (OECD), inflation in Europe is expected to remain above the ECB's 2% target until 2025.
Investors are closely monitoring speeches by Federal Reserve officials for more information on possible monetary policy adjustments. Meanwhile, Eurozone retail sales data for December is expected to be released on Tuesday, providing additional information on economic conditions in the Eurozone.
Trading recommendation: If the price consolidates below 1.0750, we start selling. In case of overcoming the mark 1.0850 - buy.
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