The Euro is trending lower on Wednesday. EUR/USD is down 0.04% and is trading at 1.0825 in the European session at the time of writing.
Eurozone GDP rises, industrial production eases
The Eurozone economy recovered in the first quarter. GDP grew 0.3% quarter-on-quarter, up from -0.1% in the first quarter. For the year, GDP rose to 0.4%, up from 0.1% in the first quarter.
Industrial production increased 0.6% month-on-month in March, following a revised 1% increase in February, slightly above market expectations of 0.6%. For the year, industrial production decreased 1%, following a revised -6.3% increase in February, above market expectations of -1.2%. Recent releases point to an improving euro area economy with demand rising. Also, an improving Chinese economy is increasing demand for euro area exports.
US inflation expected to ease
All eyes are on the US CPI report today, which could decelerate the US Dollar. The headline CPI is expected to fall to 3.4% y/y in April from 3.5% in March. On a monthly basis, the headline CPI is forecast to remain stable at 0.4%. The core CPI, a better indicator of inflation trends, is expected to fall to 3.6% y/y from 3.8% and to 0.3% y/y from 0.4%.
Federal Reserve Chairman Jerome Powell said on Tuesday that inflation is falling more slowly than expected and that the central bank will be patient and “let tightening policy take effect,” a remark likely intended to cool market enthusiasm if the consumer price index (CPI) comes in weaker than expected.
According to the CME FedWatch tool, money markets are widely expecting the Fed to keep rates steady at its June meeting, then cut them by 32% in July and 67% in September. In January, markets were pricing in six rate cuts, but a strong U.S. economy and rising inflation have significantly reduced expectations of rate cuts.
EUR/USD Technical
- EUR/USD is under pressure at the resistance level of 1.0842, above which there is resistance at 1.0863.
- Supports at 1.0804 and 1.0783
The content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions expressed are those of the author and not necessarily those of OANDA Business Information & Services, Inc. or its affiliates, subsidiaries, officers or directors. If you wish to reproduce or redistribute content found on MarketPulse, the award-winning forex, commodities and global index analysis and news site service produced by OANDA Business Information & Services, Inc., please access our RSS feed or contact us at info@marketpulse.com. For more information on trends in global markets, visit https://www.marketpulse.com/. © 2023 OANDA Business Information & Services Inc.