The EUR/USD pair is closing in on the 1.0900 level, thanks to a strengthening US Dollar and upcoming policy changes from the European Central Bank (ECB). The surge of the US Dollar has pushed the pair closer to this mark, causing many investors to review and adjust their trading strategies. It’s all eyes on the ECB now, as any policy changes typically have a profound impact on forex trading.
In the recent European trading session, the pair retracted slightly from the 1.0900 resistance level. Despite a softened US Dollar, the pair held steady – fears of an economic downturn and a less than exciting US ISM Manufacturing PMI report for May being key factors. However, through all this, the pair stayed above the 1.0850 level. Now, the market patiently awaits the release of the US Non-Farm Payrolls data and other key indicators for further guidance.
With the revision of Q1 GDP growth from 1.6% to 1.3%, concern over the slowing US economic momentum is growing. This less than stellar US manufacturing data has raised expectations of the Federal Reserve lowering interest rates come September.
Anticipating ECB policy amid EUR/USD fluctuations
Yet, even this perspective has critics, with concerns over a possible cycle of rate cuts and inflation risks being raised.
Upcoming data releases, such as the US ISM Services PMI, ADP Employment Change, May NFP report, and April Job Openings data, could influence expectations about the Federal Reserve’s rate adjustment. Their impact on market speculation regarding the Fed’s next steps makes these indicators important ones to keep an eye on.
The pressure on the EUR/USD pair is rising with the USD. The ECB’s impending interest rate decision is an important event for the Euro. Current predictions hold a 60-basis point cut in the ECB’s primary lending rate for this year, though a recovery in price pressures and a better economic outlook have somewhat softened these expectations.
The EUR/USD pair could rise to near 1.0940 and the 1.1000 resistance level, speculation suggests. However, a crafty turn in ECB’s monetary policy or US Federal Reserve actions could disrupt this forecast. Therefore, consideration of diverse market factors, such as geopolitical issues, inflation, unemployment rates, and global market circumstances, is vital for accurate trading and investment decisions.
