Euro Edges Higher as Powell Downplays Rate Cuts, Focus Shifts to US CPI
The EUR/USD currency pair has gained slightly above the 1.0800 resistance level in Tuesday's early trading session. This uptick comes despite stronger-than-expected US Producer Price Index (PPI) data for April.
Hot PPI Data Doesn't Deter Euro:
- The US PPI figures showed higher-than-anticipated inflation, potentially dampening expectations of an immediate Federal Reserve rate cut.
- However, the Euro has managed to strengthen against the US Dollar.
Powell Emphasizes Holding Rates Steady:
- Following the PPI release, Fed Chair Jerome Powell downplayed the possibility of imminent rate cuts, emphasizing the need to maintain current rates to control inflation.
- This potentially strengthens the Euro by reducing the appeal of the Dollar as a safe-haven asset.
Focus Shifts to US CPI:
- Investors are now awaiting the release of the US Consumer Price Index (CPI) data for April on Wednesday, which will be a more critical gauge of inflation.
- A higher-than-expected CPI reading could further bolster the Euro by increasing expectations of a more dovish Fed stance compared to the ECB.
Technical Analysis: EUR/USD at a Crossroads
- The EUR/USD is currently trading near the key 1.0800 resistance level.
- The 200-day EMA at this level is acting as a significant hurdle for the Euro.
- The pair is approaching the downward trendline of a symmetrical triangle pattern on the daily chart, indicating a potential breakout in either direction.
- The RSI remains within the 40.00-60.00 range, suggesting continued indecisiveness among market participants.