Major events in Euro Area and US on Friday

  • Friday’s key economic events include Euro Area CPI and US PCE data
  • Market dynamics might suggest a potential delay in the ECB’s first rate cut to June, impacting the euro-dollar exchange rate, which may see the dollar recover against the euro if January’s PCE data surpasses estimates

Friday is a significant day with Euro Area Consumer Price Index (CPI) and US Personal Consumption Expenditures (PCE) data on the radar.  

Euro Area inflation likely eased to 2.5% in February, and the official report is expected on Friday after a rush of local economic data from the Euro Area. The European Central Bank (ECB) is grappling with the challenge of bringing core inflation down from 3% to 2%.  

While the market previously anticipated rate cuts to begin in April, the ECB, emphasizing data reliance, has prompted market adjustments, pushing the expected first rate cut to June.  

In the US, the focus this week is on the PCE data. The day before, we do get Q4 GDP second estimate. But unless it is adjusted significantly, this will likely not have an impact.  

Anticipating comparable rate cut trajectories in both economies, the dollar could potentially make up recent losses against the euro, particularly if January’s PCE data exceeds estimates, thanks to its superior interest rate differential.  

Thursday witnessed a surge that touched the 50-day simple moving average (SMA) before a subsequent retreat. Looking at the short term, technical indicators on the 4-hour chart hint at a potential upward bias. EUR/USD is presently trading above all its moving averages, and the 20 SMA appears poised to surpass the mildly bearish 200 SMA. 

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