EURUSD auction range rises above 1.0850.
The EURUSD pair attempts to move the trading range over the critical resistance level of 1.0850. The major currency pair strengthens as the US dollar continues weak and chances for early European Central Bank (ECB) rate reduction fade further.
The overall market action appears disorganized. With the S&P 500 futures marginally lower and risk sensitive currencies performing strongly. The US Dollar Index (DXY) falls to 103.80. Amid expectations of a rate cut by the The Federal Reserve (Fed) has increased.
The weak US Manufacturing PMI has fuelled anticipation of Fed rate reduction in June.
The CME FedWatch program predicts a 58% possibility that interest rates will fall. By 25 basis points (bps) during the June policy meeting. Prior to Friday’s release of the February ISM Manufacturing PMI data. Expectations for a rate decrease were at 53%.
The ISM published the Manufacturing PMI at 47.8, below estimates of 49.5 and the previous reading of 49.1. The agency also announced that the fresh factory orders index has dropped considerably. Indicating that the Manufacturing PMI rebound has stopped.
The Eurozone’s robust monthly inflation rise has lowered early ECB rate-cut predictions.
Moving forward, market investors will focus on Fed Chair Jerome Powell’s speech before Congress, in which he is expected to underline the need for solid data to show that inflation is on. Stick to the 2% aim.
In the Eurozone, stickier-than-expected preliminary inflation data for February has pushed back hopes of an early rate cut by the ECB. Fears of sustained inflation grew when monthly headline and core inflation numbers rose by 0.6% and 0.7%, respectively.
https://voiceoftraders.com/analysis/gold-nearing-two-month-high-despite-growing-fed-rate-drop-bets
