The euro edged higher on Tuesday, with EUR/USD trading at 1.0798 during the European session. German inflation held steady in April at 2.2% y/y, with services inflation slowing but offset by higher food prices. The monthly inflation rate rose by 0.5%, the highest monthly gain in 14 months.
German ZEW economic sentiment rose to 47.1 in May, its highest level since February 2022. This increase in confidence among financial experts also boosted eurozone ZEW economic sentiment. Germany’s economy is showing signs of recovery, with stronger-than-expected GDP in the first quarter and increasing domestic activity.
Federal Reserve Chair Powell is set to speak in Amsterdam later today, with markets looking for clues on a potential rate cut. The Fed has delayed rate cut plans due to the resilient US economy and unexpected inflation acceleration. However, a drop in this week’s inflation releases could increase the likelihood of a rate cut in September.
On the technical side, EUR/USD is testing resistance at 1.0809, with further resistance at 1.0829. Support levels are at 1.0788 and 1.0768. Please note that this content is for general information purposes only and is not investment advice. Opinions expressed are the author’s own.