Fundamental Market Analysis for May 13, 2024 EURUSD
EURUSD:
The EUR/USD pair is trading down near 1.0770 in the early hours of Asian trading on Monday. Investors have shifted into a cautious mode and prefer to wait and see ahead of the release of key economic data from the US this week. Wednesday's centerpiece will be the final reading of the Consumer Price Index (CPI) for April, which is expected to show a 3.4% year-on-year increase.
European Central Bank (ECB) policymakers indicated last month that they could likely cut interest rates in June as Eurozone inflation is expected to return to 2% next year, according to a report on the April meeting. Markets expect the ECB to cut interest rate on June 6, even though the future path of the rate cut remains uncertain. Growing speculation of an ECB rate cut and a possible delay in rate cuts by the US Federal Reserve are likely to limit the euro (EUR)'s upside and create a headwind for EURUSD in the near term.
A jump in consumer inflation expectations has increased the likelihood that the Federal Reserve will hold rates longer. The inflation outlook recorded its highest level since November 2023, with the one-year inflation forecast rising to 3.5% and the five-year inflation forecast rising to 3.1%. Dallas Fed President Laurie Logan said there are upside risks to inflation, adding that it is too early to cut interest rates.
At the same time, Minneapolis Fed President Neel Kashkari said he is taking a "wait-and-see" stance and that there is a "high" bar to conclude that a rate hike is needed to reduce inflation. These "hawkish" statements of the Fed representatives contribute to the strengthening of the US dollar and put pressure on the main pair.
Trading recommendation: Trade mainly with buy orders at the price level of 1.0790. We consider sell orders at the price level of 1.0740.
The EUR/USD pair is trading down near 1.0770 in the early hours of Asian trading on Monday. Investors have shifted into a cautious mode and prefer to wait and see ahead of the release of key economic data from the US this week. Wednesday's centerpiece will be the final reading of the Consumer Price Index (CPI) for April, which is expected to show a 3.4% year-on-year increase.
European Central Bank (ECB) policymakers indicated last month that they could likely cut interest rates in June as Eurozone inflation is expected to return to 2% next year, according to a report on the April meeting. Markets expect the ECB to cut interest rate on June 6, even though the future path of the rate cut remains uncertain. Growing speculation of an ECB rate cut and a possible delay in rate cuts by the US Federal Reserve are likely to limit the euro (EUR)'s upside and create a headwind for EURUSD in the near term.
A jump in consumer inflation expectations has increased the likelihood that the Federal Reserve will hold rates longer. The inflation outlook recorded its highest level since November 2023, with the one-year inflation forecast rising to 3.5% and the five-year inflation forecast rising to 3.1%. Dallas Fed President Laurie Logan said there are upside risks to inflation, adding that it is too early to cut interest rates.
At the same time, Minneapolis Fed President Neel Kashkari said he is taking a "wait-and-see" stance and that there is a "high" bar to conclude that a rate hike is needed to reduce inflation. These "hawkish" statements of the Fed representatives contribute to the strengthening of the US dollar and put pressure on the main pair.
Trading recommendation: Trade mainly with buy orders at the price level of 1.0790. We consider sell orders at the price level of 1.0740.
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