With the Eurozone’s latest economic data releases, the EUR-USD shows subtle movements, reflecting a complex interplay of economic indicators. Recent data from the Euro area could be mistaken for a pat on the back for the European Central Bank (ECB). With inflation showing signs of cooling off and Q1 economic performance outpacing the gloomy forecasts, it’s like the ECB has an ace up its sleeve.
Here’s the breakdown:
- April’s CPI stubbornly parked at +2.4% year-on-year, not budging from expectations. The core CPI, though, decided to be a slight overachiever at +2.7% compared to the forecasted +2.6%.
- Q1 GDP growth totaled +0.3%, outperforming the humble +0.1% expectation.
This mix of numbers is music to the ears of Christine Lagarde and her crew, hinting that the rate cut scheduled for June is almost a done deal. However, the ECB plays it cool with no promises of a follow-up cut in July.
EUR-USD Technical Analysis
Peeking at TipRanks’ summary of technical indicators, the technicals aren’t throwing any parties for EUR-USD. The 1-week and 1-day views signal a Sell, with the 20-period and 50-period exponential moving averages hovering above the current price of $1.0704.
Bullish vs. Bearish Case
The Bullish Case: If the economic data continues to outperform and inflation pressures wane, we could see sustained strength in the euro, supporting a bullish scenario for EUR-USD, especially if the ECB manages its rate cuts without spooking the markets.
The Bearish Case: However, if inflation stubbornly clings above 2%, or if geopolitical tensions (looking at you, oil prices) introduce new risks, the bears might have their day, pushing EUR-USD lower despite the ECB’s maneuvers.
