EURUSD falls to around 1.0720 as the US dollar strengthens amid dismal US Manufacturing PMI data.
In Tuesday’s European session, EURUSD edged down but held important support below 1.0700, down from a more than two-week peak above 1.0770 on Monday.
The euro is on edge ahead of the preliminary Eurozone HICP report for June.
The major currency pair is expected to remain volatile as investors look ahead to the preliminary Eurozone Harmonized Index of Consumer Prices (HICP) data for June, which will be released at 09:00 GMT.
The inflation data is expected to reveal that HICP decelerated to 2.5% year over year. from May’s figure of 2.6%. In the same time, the core HICP, which excludes volatile components such as food, energy, alcohol, and tobacco, is expected to expand at a slower rate of 2.8% compared to the previous release of 2.9%. The scenario in which price pressures fall at the expected or faster rate will increase expectations for future interest rate decreases by the European Central Bank (ECB).
On Monday, the preliminary German HICP report for June showed that price pressures had weakened more than expected, paving the way for the ECB to drop interest rates twice in succession. However, authorities have hesitated from providing a clear rate-cut path, fearing that an aggressive policy-easing effort may reignite pricing pressures.
Also, ECB President Christine Lagarde stated at the ECB Forum on Central Banking on Monday. “It will take time for us to gather sufficient data to be certain that the risks of above-target inflation have passed.” “The strong labor market means that we can take time to gather new information,” Lagarde continued, according to Reuters.
Aside from the Eurozone’s inflation figures, France’s second round runoffs on July 7 will keep the Euro in check. According to exit polls for the first round of France’s parliamentary elections. Marine Le Pen’s far-right National Rally (RN) is leading comfortably. Although by a lower margin than expected.
Daily Market movers: EURUSD remains shaky as the US dollar bounces back.
EURUSD dips slightly as the US Dollar (USD) recovers. Despite the United States (US) The June ISM Manufacturing Purchasing Managers’ Index (PMI) survey shows that manufacturing activity unexpectedly fell. Data also show that inflationary pressures in the manufacturing sector. As assessed by the ISM Manufacturing Prices Paid Index, increased at a far slower rate than anticipated.
The US Dollar Index (DXY), which measures the value of the US dollar against six major currencies, has recovered dramatically to near 106.00.
Investors are waiting for Fed Chairman Powell’s speech to provide new interest rate direction.
Meanwhile, investors are looking for fresh indications of when the Federal Reserve (Fed) may begin lowering interest rates this year. Investors will focus on Fed Chair Jerome Powell’s address. Which is set for 13:30 GMT.
Currently, financial markets expect the Fed to begin lowering interest rates following the September meeting. Two rate cuts this year, compared to only one cut expected by Fed experts in Latest dot plots are expected.
Aside from Fed Powell’s speech, investors will pay attention to the JOLTS Job Openings data for May. Which will be released at 14:00 GMT. Economists predict firms to publish 7.9 million job openings, slightly less than the 8.06 million reported in April.
