Euro Holds Gains Despite Uncertainty Over ECB Rate Cuts
The Euro (EUR) remains slightly positive against the US Dollar (USD) near 1.0900 on Monday, clinging to recent gains. This bullishness stems from a cautious market regarding the European Central Bank's (ECB) plans for further rate cuts.
Reasons for Euro's Strength:
- Market Uncertainty About ECB Rate Cuts: Investors are less certain about the ECB extending its rate hikes beyond June, potentially due to concerns about inflation resurgence.
- Stronger Risk Appetite: A generally more risk-tolerant market environment is also supporting the Euro.
ECB Policy Debate:
- Potential Rate Cut in July Uncertain: While a June rate hike is widely expected, ECB policymakers are divided on a July cut. Some fear it might reignite inflation.
- Data Dependence: ECB board member Schnabel emphasized that future rate decisions will depend on incoming data.
Economic Data:
- Focus on PMI Data: Investors await the release of preliminary Purchasing Managers' Index (PMI) data for the Eurozone and the US on Thursday, which will provide insights into their respective economic health.
Technical Analysis (EUR/USD):
- Bullish Breakout: EUR/USD maintains its breakout from a Symmetrical Triangle chart pattern, indicating a potentially bullish trend.
- Moving Average Crossover: A bullish crossover of the 20-day and 50-day EMAs reinforces the near-term bullish outlook.
- Relative Strength Index (RSI): The RSI hovering in the 60.00-80.00 range suggests upward momentum.