The Euro (EUR) is stuck in a tight range near 1.0770 against the US Dollar (USD) on Tuesday, lacking clear direction due to a data lull.
- Stalled Rally, Steadier Dollar: The Euro’s earlier gains were capped around 1.0800 as the USD found support. Weakening US data had initially fueled expectations of Fed rate cuts, but policymakers remain cautious due to persistent inflation.
- Fed Rate Cuts Priced In: Markets currently see a 67% chance of the Fed lowering rates by September, compared to 46% a week ago.
- Stubborn Inflation Pressures: Despite a softening US economic outlook, the Fed emphasizes controlling inflation. Recent ISM data revealed rising input costs for businesses, highlighting persistent price pressures.
Technical Analysis: EUR/USD in a Holding Pattern
- EUR/USD remains confined within a narrow range near 1.0770.
- The Symmetrical Triangle pattern on the daily chart indicates a period of consolidation and potential breakout in either direction.
- The 14-period RSI hovering around 50 suggests market indecision.
- Trading above the 20-day EMA (around 1.0723) hints at a possible near-term upside bias.
The Euro’s future trajectory hinges on upcoming data and the Fed’s stance on inflation versus economic growth.