EUR/USD aims to stabilize above 1.0850 as US Dollar faces pressure
|- EUR/USD focuses on shifting its auction range above 1.0850 as the US Dollar drops.
- Weak US Manufacturing PMI has prompted expectations of Fed rate cuts in June.
- Eurozone’s high monthly inflation growth has eased early ECB rate-cut expectations.
The EUR/USD pair aims to shift the trading range above the crucial resistance of 1.0850. The major currency pair strengthens as the US Dollar remains on the back foot and hopes of early European Central Bank (ECB) rate cuts drop further.
The overall market action seems disordered as the S&P 500 futures are slightly down while risk-sensitive currencies perform well. The US Dollar Index (DXY) drops to 103.80 as expectations for a rate cut by the Federal Reserve (Fed) have escalated.
The CME FedWatch tool shows a 58% chance that interest rates will be down by 25 basis points (bps) in the June policy meeting. The expectations for a rate-cut were at 53% before the February’s ISM Manufacturing PMI data, released on Friday.
The ISM reported the Manufacturing PMI at 47.8, lower than expectations of 49.5 and the former reading of 49.1. The agency reported that the fresh factory orders index has also come down significantly, indicating that recovery in the Manufacturing PMI has stalled.
Going forward, the market participants will focus on the Fed Chair Jerome Powell’s testimony before Congress in which he is expected to reiterate the need of having convincing evidence, which will confirm that inflation is on track to the 2% target.
On the Eurozone front, stickier-than-expected preliminary inflation data for February has pushed back expectations of early rate cuts by the ECB. The fears of persistent inflation deepened as the monthly headline and core inflation data grew strongly by 0.6% and 0.7%, respectively.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.