EURUSD – Up
An event to watch out for today:
16:00. USD – Consumer Confidence Indicator
EURUSD:
EUR/USD is unable to capitalize on a good bounce from 1.0800, a three-week low, and has been fluctuating in a narrow range during Tuesday’s Asian session. Spot prices are currently trading around 1.0840, almost unchanged for the day, and remain at the mercy of US Dollar (USD) price action.
Last week, the US central bank said that it still intends to cut interest rates by 75 bps this year. That said, several Fed officials expressed concerns over stagnant inflation and stronger than expected US macroeconomic data. This, in turn, kept traders from placing new directional bets on the US Dollar and led to a subdued/limited price scenario for the Euro-Dollar pair.
On the other hand, the common currency is undermined by expectations for a June rate cut by the European Central Bank (ECB). In fact, Bank of Italy Governor Fabio Panetta said on Monday that the ECB is moving towards an interest rate cut as inflation is falling rapidly and approaching the 2% target. Separately, ECB chief economist Philip Lane said the central bank may consider changing interest rates once it becomes more confident that wage growth is slowing and inflation is returning to the 2% target as forecast. This contributes to limiting the EURUSD’s upside.
Trading recommendation: Trade in the channel 1.0800-1.0870 on a bounce from the levels.
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