EUR/USD first cautious, then decisive
Updated
Traders await a slew of important U.S. economic data due today. The Fed's preferred inflation measure, the core personal consumption expenditures price index, is due at 12:30 p.m. Et and is expected to show a monthly gain of 0.2 percent.
In addition, personal income and spending data will be closely watched as both are key indicators of consumer strength and economic health. Any surprises in these data could affect the strength of the dollar.
Market participants will also be watching the revised UoM Consumer Confidence Report, due at 2 p.m. Et, for further insight into consumer sentiment.
Below is a technical analysis of the USD index, GBP/USD, EUR/USD.
The dollar index (DXY) was trading at $100.5586, up 0% during the session and near the key pivot point of $100.75. The immediate resistance is $100.97, followed by $101.17 and $101.47.
A break above these levels could push the index higher, indicating continued strength. On the downside, support is at $100.43, with further safety nets at $100.22 and $99.99.
Currently, the 50 moving average of $100.73 is an immediate resistance level, while the 200 moving average of $101.01 is a broader resistance level. If USD/USD breaks above the pivot point of $100.75, we could see renewed bullish momentum.
The euro traded cautiously after mixed inflation data from France and Spain. Consumer spending in France rose 0.2%, but its preliminary CPI fell to -1.2%. Meanwhile, Spain's flash CPI fell to 1.5% year on year. The number of people out of work in Germany rose by 17,000, pointing to a weak Labour market.
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According to CME's "Fed Watch", the probability of a 25 basis point cut by November is 45.9%, and the probability of a 50 basis point cut is 54.1% (50.1% and 49.9%, respectively, before the PCE data release). The probability of a cumulative cut of 50 basis points by December is 24.0%, and the probability of a cumulative cut of 75 basis points is 50.2%; The probability of a cumulative 100 basis point cut is 25.8% (26.0%, 50.0% and 24.0%, respectively, before the PCE data).
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