EUR/USD gains ground in a mixed context on the ECB's monetary policy

• EUR/USD rises to 1.0784 following mixed comments from central banks and economic data, extending gains for the third day in a row.
• The Fed's cautious stance on rate cuts stands out, with Austan Goolsbee's dovish view contrasting Powell's alignment.
• US Treasury yields hit 2024 highs, bolstering the USD amid mixed reactions to CPI updates.
• German inflation continues to fall, triggering the ECB's debate on the rate adjustment schedule.

The pair EUR/USD rose steadily for the third consecutive day in early trading of the North American session, driven by the latest comments from officials at the Federal Reserve (Fed) and the European Central Bank (ECB). At the time of writing, the pair is trading at 1.0784, after reaching a daily low of 1.0762.

Mixed stances from Fed and ECB officials keep EUR/USD below 1.0800

Over the past week, Fed officials had insisted that it is too early to cut rates, even though the disinflation process continues. On the more “hawkish” side of the moderates is Chicago Fed President Austan Goolsbee, who remains optimistic about the economy and inflation and has been the most active of the moderates. Other regional Fed bank presidents, including Susan Collins, Neil Kashkari and Thomas Barkin, took a stance aligned with Fed Chair Jerome Powell. Even when Barkin was asked about Powell's comments, he said: “Chairman Powell always speaks for the Committee.”

That has pushed US Treasury yields higher, with the 10-year Treasury yield trading at 4.173% after touching 4.195%, the highest level in 2024, a tailwind for the dollar, which fluctuates between profits and losses as represented by the Dollar Index (DXY). The DXY is holding on to 104.00, down 0.05%.

Recently, the US Department of Labor revealed revisions to the US Consumer Price Index (CPI) and confirmed the advance of inflation, as the CPI stood at 3.3% year-on-year, while the core CPI stood at 3.7%.

On the other hand, data from Germany revealed that inflation fell from 3.8% to 3.1% year-on-year. In this way, the ECB maintains its progress in containing inflation. Meanwhile, ECB officials Holzmann and Lane, chief economist, remain cautious about opening the door to rate cuts: “It is very likely that there will be no interest rate cut this year or only occurs at the end of the year.” On the moderate side, Kazaks and Villeroy remain optimistic about the disinflation process and maintain their stance of softening policy.

EUR/USD Price Analysis: Technical Outlook

The pair remains biased lower, unable to break the 200-day moving average (DMA) at 1.0787, which could open the door to challenging 1.0800. Relative Strength Index (RSI) studies remain bearish, with a flat slope, suggesting that the bears are still in control. Therefore, the path of least resistance is to the downside, with next support at 1.0741, today's low, followed by the weekly low of 1.0722. The next bearish level is located at 1.0700.