EUR/USD Declines as US Dollar Strengthens Following Dissipated Fed Rate-Cut Expectations

George Solotarov
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EUR/USD Declines as US Dollar Strengthens Following Dissipated Fed Rate-Cut Expectations

The EUR/USD pair dipped to 1.0830 during Wednesday’s European session after failing to sustain a two-month high near 1.0900 on Tuesday. This decline is attributed to a shift in market sentiment as investors turn cautious ahead of the forthcoming Eurozone preliminary Consumer Price Index (CPI) data for May and the US core Personal Consumption Expenditure (PCE) Price Index data for April, both set to be released on Friday.

The upcoming Eurozone CPI and US core PCE inflation data are critical as they will heavily impact market speculations regarding potential interest rate cuts by the European Central Bank (ECB) and the US Federal Reserve (Fed).

Technical Analysis: EUR/USD Unable to Maintain Momentum Near Two-Month High

The EUR/USD pair encountered significant selling pressure as the US Dollar regained strength. Despite breaking out of a Symmetrical Triangle pattern on the daily chart, the pair struggled to maintain its upward momentum.

In the near term, the EUR/USD outlook remains positive, trading above all short-to-long-term Exponential Moving Averages (EMAs). However, the 14-period Relative Strength Index (RSI) has fallen into the 40.00-60.00 range, indicating a decline in the previously strong bullish momentum.

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