27 August 2024, EUR/USD
EURUSD:
On Monday, the EUR/USD exchange rate showed a moderation, with a pullback from 1.1200 as traders adopted a more cautious approach in the context of broad market dollar negativity, leading the FIB to reach its highest levels in 13 months last week. As the new trading week begins, market risk appetite remains balanced. However, pressure on the US dollar is becoming evident as investors prepare for the release of key inflation data later this week.
The preliminary Harmonised Index of EU Consumer Prices (HICP) is scheduled for release on Friday, and market conditions are expected to remain relatively stable until then. The forecast for EU core HICP inflation for the year to August is a decline from 2.9% to 2.8%.
The majority of the trading week will be relatively inactive in terms of economic events. The US second quarter gross domestic product (GDP) data is scheduled for release on Thursday, with an expected annualised rate of 2.8%. Friday could see significant market movements as investors focus on the timing and pace of potential interest rate cuts by the Federal Reserve. July data on core personal consumption expenditure inflation, or the price index (PCE), is expected to remain at 0.2% month-over-month. The annualised PCE inflation rate is expected to rise to 2.7% from 2.6%. However, investors are confident that inflation has moved sufficiently towards the Fed's 2% target to be considered 'close enough' to justify the possibility of the first rate cut on 18 September.
Trade recommendation: Trading predominantly Buy orders from the current price level.
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