[ad_1]
The bears succeeded in dragging the price of the EUR/USD currency pair below the psychological support level of 1.0800, with losses towards the support level of 1.0760. This is its lowest in two months, before closing trading around the level of 1.0805. The US dollar got a strong positive momentum from the signals of US Federal Reserve officials about the future of raising US interest rates until inflation in the country reaches the bank’s goal, in addition to the positive results of the US economy sectors.
Eurozone inflation rose as expected in April due to higher food and energy prices, while core inflation slowed slightly, final data from Eurostat showed last week. According to the advertiser, the Harmonized Consumer Price Index posted annual growth of 7.0 percent in April, after rising by 6.9 percent in March. The rate was in line with the initial estimate released on May 2.
By contrast, excluding energy, food, alcohol and tobacco prices, core inflation slowed slightly to 5.6 percent from 5.7 percent last month. The base rate has also been confirmed. On a monthly basis, the HICP index rose 0.6 percent, slightly weaker than the estimate of 0.7 percent.
All in all, the European Central Bank raised benchmark interest rates by a quarter point early this month after releasing flash inflation data. Policymakers were of the view that inflation expectations in the currency bloc had remained “too high for too long.” Christine Lagarde, President of the European Central Bank, also indicated more interest rate hikes to come. However, the bank slowed the pace of policy tightening from a half-point hike in March.
In the EU Spring Economic Outlook, the European Commission raised its inflation forecasts and warned that the slowdown in core inflation will be more gradual than previously expected. Inflation in the euro area was forecast at 5.8 percent this year, up from the 5.6 percent previously estimated. The forecast for 2024 was raised to 2.8 percent from 2.5 percent. The data showed that inflation in April was mainly driven by higher prices for food, alcohol and tobacco, which jumped 13.5 percent after a 15.5 percent increase in March. Energy prices, the main force behind rising inflation over the past year, rose just 2.4 percent. But this was in contrast to the 0.9 percent drop in March.
- According to the performance on the daily chart below, the general trend of the EUR/USD currency pair is still bearish.
- The move towards and below the psychological support level 1.0800 supports the bears’ strong control over the trend.
- The support levels 1.0730 and 1.0680 move the technical indicators towards strong oversold levels.
On the other hand, there will be no first reversal of the trend without the bulls returning the currency pair towards the psychological resistance level of 1.1000 again.
The EUR/USD pair is being watched this week, with many US economic data led by the announcement of the growth rate of the US economy, the preferred inflation reading of the US Federal Reserve, and the content of the minutes of the last meeting of the US Federal Reserve. From the euro area, PMI readings for the manufacturing and services sectors.
Ready to trade our Forex daily analysis and predictions? Here are the best regulated trading brokers to choose from.
[ad_2]