The euro is experiencing a small pullback | 02 July 2024

Events to watch out for today:

12:00 GMT+3. EUR - Consumer Price Index

16:30 GMT+3. EUR - ECB President Christine Lagarde to deliver a speech

16:30 GMT+3. USD - Chairman of the Board of Governors of the Federal Reserve Board Jerome Powell will deliver a speech

EURUSD:

On Monday, EURUSD hit a new high since mid-June above 1.0770 before being forced back down due to a reversal in investor sentiment in the broad market. The bullish momentum was interrupted after US business activity data showed warning signs of a deepening economic slowdown. Throughout the week, investors will be anxiously awaiting key economic indicators on both sides of the Atlantic, culminating in fresh US Non-Farm Payrolls (NFP) data scheduled for Friday.

German consumer price index (CPI) data on Monday generally failed to meet expectations, with the annualized German CPI in June falling to 2.2% from the previous reading of 2.4% and retreating from the forecast of 2.3%. Data from the US on Monday also fell short of expectations: the ISM manufacturing Purchasing Managers' Index (PMI) declined to 48.5 in June from 48.7 and fell short of the forecasted increase to 49.1. The ISM Manufacturing Goods and Services Price Index also declined sharply in June, falling to 5..1 from the previous reading of 57.0, further exceeding the forecasted decline to 55.9.

U.S. markets were suddenly rattled by renewed concerns about the upcoming presidential election in November. Recent public debates have left many questions about who will be the clear frontrunner, and on Monday the U.S. Supreme Court ruled that courts have limited ability to bring criminal charges against sitting presidents.

On Tuesday, markets will be hit with a fresh batch of key European data as well as a number of speeches from European Central Bank (ECB) executives, including another speech from ECB President Christine Lagarde. The pan-European Harmonized Index of Consumer Prices (HICP) is expected to fall slightly, with EU core HICP inflation falling to 2.8% y/y from a previous reading of 2.9%. Producer Price Index (PPI) inflation data in Europe is due out on Wednesday, followed by EU retail sales data early Friday.

In the US, investors will await Federal Reserve Chairman Jerome Powell's speech on Tuesday, followed by ADP employment change data on Wednesday and the latest US Non-Farm Payrolls (NFP) and Average Hourly Earnings for June on Friday.

Trading recommendation: Trade mainly with buy orders at the price level of 1.0760. We consider sell orders at the price level of 1.0695.

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