Market Analysis

EUR/USD Relinquishes Intraday Gains Ahead of Data-Packed Week for US and Eurozone

Amos Simanungkalit · 29 Apr 202414.3K Views

In today's European session, the EUR/USD pair is struggling to maintain its position above the key resistance level of 1.0700. This cautious behavior is observed ahead of significant economic data releases in the Eurozone scheduled for Tuesday, including the preliminary Q1 Gross Domestic Product (GDP) and Consumer Price Index (CPI) data for April.

Investor sentiment regarding potential interest rate cuts by the European Central Bank (ECB) is heavily influenced by Eurozone economic indicators. There's a growing expectation among investors that the ECB may commence interest rate cuts starting from its June meeting, viewing such a move as reasonable.

Recent comments from ECB Council members, such as Banque de France Governor François Villeroy de Galhau, have fueled speculation about upcoming rate cuts. Villeroy suggested that if current conditions persist, there's no need to delay rate cuts any further, anticipating a pivot towards such measures from June onwards.

However, there's uncertainty regarding the extent of the ECB's rate-cutting strategy. While some policymakers advocate for a series of rate cuts following the initial move in June, others, like ECB policymaker Joachim Nagel, express reservations. Nagel is concerned about the potential impact of strong wage growth on service inflation and doubts whether inflation will reach the target level in a timely manner.

Investor attention is particularly drawn to the release of German preliminary inflation data for April, expected at 12:00 GMT, with forecasts indicating a steady growth in the Harmonized Index of Consumer Prices (HICP) by 2.3% annually.

Technical Analysis: Sustainability over 1.0700 is the target for EUR/USD

The EUR/USD pair is making efforts to consolidate above the 1.0700 mark, but uncertainties persist. Technical indicators show mixed signals, with the 20-day Exponential Moving Average (EMA) acting as a significant barrier for bullish momentum, while the long-term outlook remains bearish, as suggested by the declining 200-day EMA near 1.0800.

The Relative Strength Index (RSI) indicates a consolidation phase ahead, falling within the 40.00-60.00 range.

In summary, the EUR/USD pair is experiencing a contraction in volatility, evident from the Symmetrical Triangle formation on the daily timeframe, with its upward and downward sloping borders marked from previous lows and highs, respectively.