From the economic data from the United States of America and Europe, we discover that inflation still persists. The European economy, however, saw a bit of improvement in the first quarter of the year, as Consumer Price Indexes showed a recovery of about 0.1%. The US GDP advanced at a rate of 1.1% during the first quarter, which is below expectations. Strong consumption numbers were an encouraging factor. While wage inflation increased more than anticipated in the first quarter, consumer inflation moderately recovered, suggesting the fight against inflation in the US is still ongoing.
Economic analysts continue to foresee the possibility of a gloomy global outlook. In addition to that, the recent failure of top banking institutions in the US has raised concerns for the banking sector.
The Central Bank Will Announce New Monetary Policy This Week
The Federal Reserve is preparing to come up with a new economic policy by Wednesday. The interest rate is to rise by a total of 25 basis points, to 5.00%–5.25%. There are signs of a downturn, notwithstanding the tight job market. The Fed has been able to tighten conditions thanks to banking developments and a decline in inflation since its peak. The economy as a whole is not doing well, and inflation is declining.
Traders are eagerly waiting for the Fed’s policy, as its estimates and remarks will have an impact on traders’ expectations for future interest rate movements. If the projections or policy include some predictions for rate reduction later in the year, the US rate could decline, which could push EUR/USD to new cycle highs.
The European Central Bank (ECB) is expected to hold its own meeting on Thursday. A rate increase of 25 basis points is likely, but a rise of 50 bps is not an option. It is important to note that the ECB abandoned its forward guidance in March due to the financial crisis, which increased the general unpredictability of the upcoming meetings.
EUR/USD Technical Outlook
EUR/USD has steadily risen to its 13-month high after breaking the key resistance of the $1.1000 price level. However, the bull market could not survive above its newly attained level. Selling pressure has forced it below $1.10512, which is the new supply level, as bulls keep $1.09757 as the support level. Also, the bulls are making significant advancements toward breaking the resistance. The market is very likely to see some significant market excitement in the coming weeks as the government and stakeholders make important decisions that are crucial for these market pairs.
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