Euro Recovers as US Dollar Retreats Ahead of Inflation Data
The Euro (EUR) strengthened against the US Dollar (USD) on Friday as the DXY pulled back ahead of the release of the US Personal Consumption Expenditures Price Index (PCE) for August. The PCE data is expected to influence market expectations for the Federal Reserve's (Fed) interest rate outlook.
Inflation Data and Fed Rate Expectations:
The PCE report is anticipated to show a slight increase in core inflation compared to the previous month. While financial markets currently anticipate a continued rate cut by the Fed in November, there remains uncertainty regarding the size of the cut.
Eurozone Inflation Data:
The Eurozone's recent inflation data revealed a deceleration in price pressures in France and Spain. This has led to increased expectations that the European Central Bank (ECB) will cut interest rates again in October.
Technical Analysis: EUR/USD Consolidates
The EUR/USD pair has been consolidating in a narrow range. A break above the round-level resistance of 1.1200 could signal further appreciation. However, the RSI indicates that momentum is weakening.