■German inflation rises moderately but Can Dogecoin reach ?misses analyst projections
■All eyes on Fed meeting and Eurozone economic indicators this week
■US jobs report on Friday could shift market sentiment
The EUR/USD currency pair exhibited limited movement during Monday's trading session, consolidating near the 1.0720 level as financial markets positioned themselves ahead of Wednesday's highly anticipated Federal Reserve policy announcement. Market participants widely anticipate the US central bank to maintain current interest rates, though attention will focus on any signals regarding the timing of potential rate reductions. Current market pricing indicates approximately 58% probability of an initial rate cut occurring in September, according to CME's FedWatch Tool.
Recent economic data from Germany showed consumer prices increased 0.5% month-over-month in April, slightly higher than March's 0.4% rise but falling short of the anticipated 0.6% gain. Year-over-year inflation measured by the Harmonized Index of Consumer Prices (HICP) edged up to 2.4%, marginally exceeding expectations of 2.3%. Market analysts now await Tuesday's release of pan-European inflation figures, with consensus estimates suggesting the annual rate will remain unchanged at 2.4% for April.
European economic growth figures scheduled for release on Tuesday are projected to show modest improvement, with first-quarter GDP expected to register 0.1% growth following a stagnant final quarter of 2023. The combination of inflation and growth data will provide crucial insights into the European Central Bank's potential policy trajectory in coming months.
This week's economic calendar features several high-impact events, beginning with the Fed's rate decision on Wednesday and culminating with Friday's US Non-Farm Payrolls report. Current forecasts suggest the US labor market may show signs of cooling, with job growth expected to decline to 243,000 from March's robust 303,000 reading. These data points could significantly influence near-term currency market dynamics.
Technical perspective on EUR/USD
From a technical standpoint, EUR/USD continues to demonstrate resilience above the psychologically significant 1.0700 level, finding support from the rising 200-hour Exponential Moving Average. However, the pair faces considerable resistance above 1.0750, with multiple failed attempts to establish a foothold in this region. While downside momentum appears limited, the prevailing bearish bias persists, keeping the currency pair within a well-defined trading range.
The pair currently trades approximately 2.5% below its recent peak near 1.0980, with immediate support emerging around 1.0600. Market technicians suggest that a decisive break above 1.0750 could signal potential for further upside, while failure to hold 1.0700 may open the door for a retest of lower support levels.
Market positioning and sentiment
Trading activity in the EUR/USD pair reflects cautious market positioning ahead of this week's major economic events. Options market data indicates increased demand for downside protection, suggesting some traders anticipate potential volatility following the Fed meeting. Meanwhile, positioning data reveals that speculative accounts have reduced their net short positions in recent weeks, potentially setting the stage for a more balanced technical environment.
The interplay between US monetary policy expectations and European economic fundamentals continues to drive EUR/USD price action. With the Fed maintaining a cautious approach to policy normalization and the ECB potentially considering rate cuts later this year, the interest rate differential between the two currencies remains a key determinant of exchange rate movements.
