The EUR/USD pair stabilized around 1.0800 on Wednesday, following a modest pullback from a near four-week high of 1.0850. Investors are cautiously awaiting Thursday’s release of the US Consumer Price Index (CPI) for June, which will provide crucial insights into the Federal Reserve’s (Fed) potential policy trajectory.
Economists anticipate a 0.1% monthly increase and a 3.1% annual increase in headline inflation, while core inflation is expected to remain steady at 0.2% and 3.4% on a monthly and annual basis, respectively.
Powell’s Comments and Market Implications
In his semi-annual Congressional testimony, Fed Chair Jerome Powell emphasized the need for “significant confidence” in declining inflation before considering interest rate cuts. He also voiced concerns about slowing US economic growth and a cooling labor market.
The market’s reaction to Powell’s comments was mixed, with the US Dollar (USD) weakening against the Euro (EUR). Additionally, the failure of France’s far-right National Rally to secure a majority in recent elections further boosted the EUR.
Technical Analysis: Symmetrical Triangle Formation
EUR/USD is trading within a Symmetrical Triangle pattern, indicating a period of consolidation and potential volatility contraction. The pair is currently hovering above key support levels, including the 20-day and 50-day Exponential Moving Averages (EMAs), as well as the 200-day EMA.
The 14-day Relative Strength Index (RSI) is approaching 60.00, suggesting potential bullish momentum if it breaks above this level.
Key Points & Outlook:
- EUR/USD consolidates ahead of US CPI data
- Powell expresses caution on rate cuts
- French election results support EUR
- Technical analysis reveals Symmetrical Triangle formation
- Bullish momentum possible with RSI breakout