May 29, 2024

The EURUSD exchange rate is testing a resistance level with German data ahead on Wednesday.

EURUSD-–-Daily-Chart EURUSD – Daily Chart

The EURUSD exchange rate is testing the 1.0885 level ahead of the data on Wednesday.

The European economy has consumer confidence data from the German economy at 2 pm HKT on Wednesday. Numbers are still in negative territory but an improvement is expected from last month.

That will be followed by inflation at 8 pm HKT which is a preliminary number for May. An increase from 2.2% to 2.4% is expected and an increase could boost the price of the euro.

However, investors are looking forward to the ECB meeting on June 6, when a first interest rate cut is expected.

Consumer Inflation expectations in the eurozone were lower in April, according to the European Central Bank. Prices are expected to advance 2.9% over the next 12 months, down from 3% in March, ECB data said.

There are still some competing ideas among ECB policymakers, with France’s Francois Villeroy de Galhau saying on Monday that the ECB shouldn’t rule out cutting rates in June and July. More hawkish policymakers, including executive member Isabel Schnabel, recently opposed back-to-back cuts.

Chief Economist Phillip Lane said, “There is enough in what we see to start interest rate cuts,” but added, “Things will be bumpy and things will be gradual”.”

ECB President Christine Lagarde also hinted that interest rates could start a downward trajectory into next year.

“I’m really confident that we have inflation under control,” Lagarde told Ireland’s RTE television.

“The forecast that we have for next year and the year after that is really getting very, very close to target, if not at target. So, I am confident that we’ve gone to a control phase,” she said.

Consumer confidence in the United States came in higher on Monday, at 102.0 versus forecasts of 95.9. Friday will have important US data, with a GDP reading for the first quarter. Analysts expect a reading of 1.3% for the economy, down from 3.4%, as higher rates continue to weigh on growth.

With an interest rate cut expected in Europe next week, the US GDP will likely be the most important in the near term.

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