- EUR/USD falls after a brief pullback from 1.0800 ahead of a data-packed US economic calendar.
- The USD Index rises as market sentiment turns bearish ahead of the US open after a long weekend.
- Preliminary Eurozone inflation data will guide market expectations for ECB rate cuts in June.
The EUR/USD pair falls after a retracement movement until approaching the resistance level of 1.0800 late in the London session. The major currency pair is facing pressure as investors remain cautious ahead of a data-packed week.
Market sentiment appears to be risk averse as risk sensitive currencies are declining. S&P 500 futures have given up almost all of the gains recorded in the European session before the open after a long weekend due to Good Friday. The US Dollar Index (DXY) advances to 104.65 points amid uncertainty ahead of the crucial March Non-Farm Payrolls (NFP) report in the United States, scheduled for Friday.
Ahead of the US NFP, investors will focus on the March US Manufacturing PMI report, due at 14:00 GMT. It is estimated that the factory data will have increased to 48.4 from 47.8 in February, but will remain below the threshold of 50.0.
The US dollar rises even as market expectations have increased that the Federal Reserve (Fed) will pivot towards rate cuts starting with the June policy meeting. According to CME's FedWatch tool, traders rate the possibility of the Fed cutting interest rates in June at 65%.
The likelihood of a rate cut has increased after US core personal consumption expenditure (PCE) inflation data for February softened as expected. Monthly and annual core PCE inflation grew by 0.3% and 2.8%, respectively. Likewise, Fed Chair Jerome Powell stated following the release of the US core PCE report that the latest US inflation data was “in line with what we would like to see.”
In the Eurozone, investors await preliminary inflation data for March, which will be published on Wednesday. Annual core inflation is expected to have slowed to 3.0% from 3.1% in February. The annual Harmonized Index of Consumer Prices (HICP) is expected to have risen at a steady 2.6%. The easing of price pressures would accelerate investors' perspectives on the European Central Bank (ECB), kicking off the cycle of rate cuts starting with the June meeting.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
