EURUSD rises 1.0770 as the US dollar falls, while preliminary Eurozone service inflation for June remains stable.
EURUSD rises near 1.0770 level in Wednesday’s European session, following a robust rebound from round-level support of 1.0700 on Tuesday. The major currency pair extends its rebound as sticky preliminary Eurozone service inflation. For June raises concerns about price pressures continuing high for an extended term.
The headline Eurozone HICP fell as expected, but the core figure increased consistently year on year.
Eurozone Harmonized Index of Consumer Prices (HICP) data showed. That headline inflation decelerated as expected. 2.5%, up from 2.6% in May. During the same period, the core HICP. Which excludes volatile items, climbed at a steady rate of 2.9%, above expectations of 2.8%. The aggregate data does not provide any clarity on where price pressures are headed. Leaving the European Central Bank’s (ECB) interest-rate forecast murky.
However, ECB President Christine Lagarde stated at the ECB Forum on Central Banking. That inflation is trending in the right direction and that the central bank is well on its way to disinflationary policies.
On the interest rate forecast, ECB policymaker and Ireland’s Central Bank Governor Gabriel Makhlouf said. He is fine with one more rate cut this year but not with market expectations of two. However, he did not rule out. It’s possible.
On the political front, the centralist coalition and the left wing of the European Union’s (EU) second largest country withdrew over 200 candidates from Sunday’s parliamentary elections in an effort to prevent the extreme right from getting an outright majority.
Daily Market movers: EURUSD rebounds further as the US dollar falls.
EURUSD extends its rebound to around 1.0770 as the US Dollar (USD) falls more. The major currency pair gains as Federal Reserve (Fed) Chair Jerome Powell’s comments at the ECB Forum on Central Banking showed that the US economy has resumed its disinflationary path.
Powell stated that recent data show that the disinflationary process has resumed and that the central bank has made significant efforts. Inflationary pressures have improved slightly. However, he added that policymakers want to see more positive inflation statistics before reducing interest rates. Powell’s statements were substantially more consistent with expectations, as was his speech at the June policy meeting.
Meanwhile, expectations for the Fed to cut interest rates twice this year and begin the lowering cycle at the September meeting remain strong. Investors will closely watch the US Nonfarm Payrolls (NFP) data for June, which will be released on Friday. The NFP report will show the present state of labor demand and pay growth, influencing market expectations for Fed rate decreases in September.
The US Dollar will remain shaky on an event-packed Wednesday. ADP Employment Change, ISM Services. The Purchasing Managers’ Index (PMI) and the Federal Open Market Committee (FOMC) Minutes for June are planned for release.
