- The EUR/USD pair recorded losses in the miniature term on Monday, staying above 1.0800 but falling.
- The elections in France produced an unconvincing result, with the coalition minority in an impasse.
- US Federal Reserve Chairman Powell is scheduled to testify before US federal committees this week.
EUR/USD stumbled on Monday after a mixed election result in France left policy guidance for the euro bloc unclear. A victory for a minority coalition government in France kept a financially disastrous far-right party out of the leadership race after a robust upset in the previous European Parliament election. Still, the victory was far from decisive, as a collection of coalition parties with conflicting ideologies are poised to create political gridlock in France in the coming months.
Forex Today: All Eyes on Powell
Federal Reserve (Fed) Chairman Jerome Powell is scheduled to make his first of two appearances this week when he delivers his semiannual monetary policy report to the U.S. Senate Banking Committee. This will be followed by his second appearance on Wednesday, when he delivers the same report to the U.S. House of Representatives Financial Services Committee.
Later this week, key US inflation data is due. US consumer price index (CPI) inflation is due on Thursday, while wholesale producer price index (PPI) inflation is due on Friday. Some investors who are hoping for a drop in inflation that will prompt the Fed to cut interest rates sooner rather than later may be disappointed. Forecasts suggest that both CPI and PPI inflation rates should remain stable or rise slightly.
The final inflation data for Germany will be released during the European market session on Thursday. Overall, the German Harmonized Index of Consumer Prices (HCOB) is expected to hold steady at 2.5% year-on-year, as inflationary pressures continue to threaten the Bundestag’s 2% inflation target.
Economic indicator
Consumer Price Index excluding food and energy (MoM)
Inflationary or deflationary trends are measured by periodically summing the prices of a basket of representative goods and services and reporting the data as the Consumer Price Index (CPI). CPI data is compiled monthly and published by U.S. Department of Labor Statistics. The MoM print compares commodity prices in the reference month to the previous month. The CPI Ex Food & Energy excludes the so-called more volatile food and energy components to provide a more right measure of price pressures. Generally speaking, a high reading is seen as bullish for the U.S. dollar (USD), while a low reading is seen as bearish.
EUR/USD Technical Levels
The fiber sector is struggling after multiple near-term failures to break through the 1.0840 level, and bulls are running out of fuel as the 200-hour exponential moving average (EMA) rises to 1.0780, maintaining a tight level below the daily price move.
Daily candles continue to trade within the mid-range of the descending channel through 2024, with EUR/USD heading towards a falling technical ceiling as its upper bound declines towards 1.0850.
