The EUR/USD pair is trading with a bearish bias near 1.0885 in Monday’s early Asian session. This is due to the rise in US PPI inflation in June, which exceeded expectations. The US Dollar (USD) has seen increased demand as a safe-haven currency amid political violence over the weekend.
The Eurozone is set to release May Industrial Production and July NY Empire State Manufacturing Index data on Monday, along with a speech from Federal Reserve’s Mary Daly. The US Producer Price Index (PPI) rose to 2.6% YoY in June, above the consensus of 2.3%, while the core PPI climbed to 3.0% YoY. Despite this, attention is still on the cooler Consumer Price Index (CPI) inflation, raising expectations for a rate cut.
The University of Michigan’s Consumer Sentiment Index survey dropped to 66.0 in July, the lowest in seven months, indicating a decline in consumer confidence. Fitch analysts predict that the Federal Open Market Committee (FOMC) may cut interest rates sooner rather than later due to concerns over the labor market.
The recent US political violence has boosted the Greenback, creating a headwind for EUR/USD. In Europe, officials expect pricing pressures to remain steady for the year, lowering expectations for further rate cuts by the European Central Bank (ECB). ECB president Christine Lagarde emphasized a cautious approach, noting the uncertain growth outlook.
Overall, economic indicators and data releases will continue to influence the direction of the Euro. Factors such as inflation data, GDP, PMIs, employment, and trade balance will play a significant role in determining the strength of the Euro in the global market.