EUR/USD Holds Steady Ahead of US Inflation Data

: George Solotarov; 13 August 2024; Hits: 108

EUR/USD Holds Steady Ahead of US Inflation Data

The EUR/USD currency pair is trading sideways near the 1.0900 level, with investors cautiously awaiting the release of the US Producer Price Index (PPI) data. The PPI is expected to show a deceleration in both monthly and annual terms, but its impact on the US Dollar is anticipated to be limited compared to the upcoming Consumer Price Index (CPI) report.

Market Focus on US Inflation and Fed Policy

The market's primary focus remains on the Federal Reserve's monetary policy path, with the upcoming CPI data being a crucial factor in determining the potential pace of interest rate cuts. A softer-than-expected CPI reading could increase expectations for more aggressive rate reductions, potentially weighing on the US Dollar.

On the Euro side, the recent decline in the ZEW Economic Sentiment indicator for Germany and the Eurozone has dampened investor optimism. However, the European Central Bank's (ECB) monetary policy stance remains a key driver for the Euro, with market participants divided on the likelihood of aggressive rate cuts.

Technical Analysis

The EUR/USD is currently trading within a channel pattern on the daily chart. A breakout to the upside could lead to a more significant rally, with potential targets at 1.1009 and 1.1065. Conversely, a breakdown below the 1.0777 level could intensify downward pressure, with support levels at 1.0700 and 1.0667.