EUR/USD Gains Trimmed Ahead of Crucial US PCE Report
The EUR/USD pair commenced the New York session around 1.0705, briefly slipping to 1.0690 before climbing to 1.0726 on the EBS platform. The decline in US yields and the dollar came on the back of the latest weekly jobless claims, final Q1 GDP, and durable goods data. Further pressure on the US dollar was exerted by rallies in equities and gold, thereby supporting the EUR/USD.
Nevertheless, the US dollar regained strength, and stocks took a dip following remarks from Federal Reserve’s Bostic, which caused a rally in USD/CNH. Consequently, EUR/USD fell back below the 10-day moving average, nearing 1.0700, and ended the day with a modest gain of only +0.24%. Technical indicators are skewed bearish, with the pair remaining in a consolidation phase and the monthly RSI on the decline. The significant risk for Friday is the US May PCE report and its potential implications for Federal Reserve policy. Should the report exceed estimates, it could drive up yields, bolster the US dollar, and weaken the EUR/USD. Ahead of the PCE data, the USD trimmed some of its earlier losses, with the yen lingering near 161.
Market Updates:
Federal Reserve’s Bostic indicated that inflation is moving in the ‘right direction’ and anticipates one rate cut in Q4. Bostic also mentioned he has penciled in four quarter-percentage-point rate cuts for 2025, describing the Fed’s approach as ‘on a long-term arc.’ He noted that GDP and job market data suggest an ‘orderly deceleration’ in economic activity that will balance supply and demand and lower inflation. Federal Reserve’s Bowman stated that it is not yet time to cut rates until there is clearer evidence of inflation easing.
