The EUR/USD currency pair is climbing in Monday’s European session, currently trading at 1.0780. This rise is attributed to a combination of improved market sentiment and a weaker US Dollar.
Euro Buoyed by ECB Rate Cut Expectations:
- Financial markets are increasingly pricing in earlier and more aggressive rate cuts from the European Central Bank (ECB) compared to the Federal Reserve (Fed).
- The ECB is anticipated to initiate rate cuts in June, potentially totaling 70 basis points (bps) throughout the year.
Fed Rate Cut Trajectory Seen as More Dovish:
- In contrast, the Fed is expected to begin lowering rates in September, with cumulative cuts of 45 bps projected by year-end.
Eurozone GDP and US CPI Data on Watch:
- This week’s key data releases for the Euro will be the preliminary Eurozone Q1 GDP figures on Wednesday. Eurostat forecasts suggest a steady growth of 0.3% and 0.4% on a quarterly and annual basis, respectively.
- The US Consumer Price Index (CPI) data for April, also scheduled for Wednesday release, will be a crucial piece of information for the EUR/USD pair.
Technical Analysis: EUR/USD at a Crossroads
- The EUR/USD has recovered from Friday’s losses and is currently trading near the 200-day exponential moving average (EMA) at 1.0780.
- The pair is nearing the lower trendline of a symmetrical triangle pattern on the daily chart, indicating a potential breakout in either direction.
- The 14-period RSI hovering between 40.00 and 60.00 reflects continued indecision among market participants.