Fundamental Market Analysis for April 09, 2024 EURUSD
EURUSD:
Favorable US labor market data and the strength of the US economy have increased uncertainty about the Federal Reserve's (Fed) rate cuts this year. Last week, Minneapolis Fed President Neel Kashkari said that he plans two interest rate cuts this year, but if inflation continues to stall, a no rate cut scenario is possible. Financial markets have priced in a 50% probability of a rate cut for both June and July, down from early April, according to the CME's FedWatch tool.
This week, attention will shift to U.S. Consumer Price Index (CPI) data for March, which will be released on Wednesday after February's 3.2% annualized inflation rate came in above expectations. Higher-than-expected March data could dampen expectations for a rate cut in June, while a lower inflation reading could fuel speculation of a rate cut.
On Thursday, the focus will be on the European Central Bank's (ECB) interest rate decision. The ECB is expected to leave interest rates unchanged at its April meeting. Data released last week showed that inflation unexpectedly fell in March, raising expectations of an ECB rate cut. Investors will also be looking for any clues about the pace of the easing cycle when it begins. Markets believe there is more than a 90% chance of an ECB rate cut in June, according to derivatives prices compiled by LSEG.
Trading recommendation: Trade with buy orders when the price reaches 1.0875. Sell at the price level of 1.0830.
Favorable US labor market data and the strength of the US economy have increased uncertainty about the Federal Reserve's (Fed) rate cuts this year. Last week, Minneapolis Fed President Neel Kashkari said that he plans two interest rate cuts this year, but if inflation continues to stall, a no rate cut scenario is possible. Financial markets have priced in a 50% probability of a rate cut for both June and July, down from early April, according to the CME's FedWatch tool.
This week, attention will shift to U.S. Consumer Price Index (CPI) data for March, which will be released on Wednesday after February's 3.2% annualized inflation rate came in above expectations. Higher-than-expected March data could dampen expectations for a rate cut in June, while a lower inflation reading could fuel speculation of a rate cut.
On Thursday, the focus will be on the European Central Bank's (ECB) interest rate decision. The ECB is expected to leave interest rates unchanged at its April meeting. Data released last week showed that inflation unexpectedly fell in March, raising expectations of an ECB rate cut. Investors will also be looking for any clues about the pace of the easing cycle when it begins. Markets believe there is more than a 90% chance of an ECB rate cut in June, according to derivatives prices compiled by LSEG.
Trading recommendation: Trade with buy orders when the price reaches 1.0875. Sell at the price level of 1.0830.
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