- EUR/USD is experiencing pre-data anxiety, trading around 1.0690.
- Market sentiment and diminishing hawkish bets on the Fed are failing to boost the Euro pair.
- Focus is on upcoming top-tier data releases and events in the US and Europe, influencing the direction of EUR/USD.
EUR/USD is exhibiting pre-data anxiety, hovering around 1.0690 in the early hours of Thursday morning in Europe. Despite the market’s risk-on sentiment and a decline in hawkish bets on the Federal Reserve (Fed), the Euro pair struggles to gather momentum. The focus remains on upcoming top-tier data releases and events scheduled in both the United States and Europe.
On Wednesday, Germany’s inflation, as measured by the Consumer Price Index (CPI), retreated to 6.1% year-on-year in May from 7.2% in April, falling short of the expected 6.5%. Similarly, the European Central Bank’s (ECB) preferred measure of inflation, the annual Harmonized Index of Consumer Prices (HICP), also eased to 6.3% year-on-year during the same month, down from the previous reading of 7.6% and below analysts’ estimate of 6.8%.
Following the release of the inflation data, ECB Vice President Luis de Guindos acknowledged that victory over inflation has not yet been achieved but expressed confidence in the trajectory. Meanwhile, ECB policymaker Madis Muller noted that core inflation shows no signs of slowing down and indicated that the ECB is likely to implement more than one interest rate hike.
In contrast, US JOLTS Job Openings increased to 10.103 million in April, surpassing expectations of 9.375 million and the previous figure of 9.745 million. However, the Chicago Purchasing Managers’ Index dropped to 40.4 in May from 48.6 in the previous month, falling short of the market forecast of 47.0. Earlier in the week, the US consumer sentiment gauge improved, although the details were less impressive.
The mixed data from the US, combined with comments from several Fed speakers, have raised doubts about the central bank’s ability to raise interest rates further. Wall Street Journal’s Nick Timiraos suggested that the Federal Open Market Committee (FOMC) is likely to maintain interest rates at their current level in June.
It is worth noting that the recent passage of the debt-ceiling bill by the US Republican-controlled House of Representatives has generated market optimism, as the ruling Democrats hold majority control in the Senate and can avoid default. This news has put downward pressure on the US Dollar and provided support to the EUR/USD price.
Looking ahead, the Eurozone CPI and HICP data for May will be closely watched, as previous inflation data has already impacted the ECB’s hawkish stance. Additionally, the US ADP Employment Change, ISM Manufacturing PMI, and S&P Global PMIs for May will provide fresh insights. Above all, the voting by US policymakers on the debt-ceiling bill in the Senate and a speech by ECB President Christine Lagarde will be crucial, given the strengthening position of EUR/USD buyers and the cautious stance of US Dollar bulls.
Title: EUR/USD Pre-Data Analysis and Key Events
|Current Level||Around 1.0690|