EUR/USD takes a halting plunge, tests below 1.10 as key inflation data looms ahead
EUR/USD took a tumble on Monday, closing 1.4% lower a brief test below 1.1000.
A (temporary) walkback of US-China tariffs bolstered risk appetite.
Key US CPI inflation data looms ahead, with EU GDP growth figures around the corner.
EUR/USD took a hard step lower on Monday, kicking off the new trading week with a fresh dip below 1.1000 before a late recovery pushed the pair back toward 1.1100. The Fiber still closed 1.4% lower on the day, and investors are bracing for a fresh batch of United States (US) Consumer Price Index (CPI) inflation data due on Tuesday.
Forex Today: All the attention shifts to US Inflation data
The US and China have jointly decided to pause steep triple-digit tariffs during initial trade discussions over the weekend, giving markets a brief respite before the US’s unusual “reciprocal” tariff schedule is set to resume in 90 days. The US Consumer Price Index (CPI) inflation report for April will be closely monitored this Tuesday. Headline CPI inflation is projected to rise to 0.3% month-over-month from the previous -0.1%, while core CPI inflation is anticipated to increase to 0.3% from 0.1%. Despite these monthly changes, both core and headline inflation are expected to remain stable YoY.
US CPI inflation, EU GDP growth on the docket this week
Final German Harmonized Index of Consumer Prices (HICP) inflation is due on Wednesday, but no major changes are expected in the non-preliminary data. Advance pan-European Gross Domestic Product (GDP) growth figures are slated for Thursday, and will be Euro traders’ big print for the week. Markets broadly expect both QoQ and annualized GDP growth to hold steady at previous figures of 0.4% and 1.2%, respectively.
EUR/USD price forecast
EUR/USD’s fresh bearish plunge on Monday saw the pair test below 1.1000 for the first time since early April. The pair is still trading north of the 50-day Exponential Moving Average (EMA) near 1.1070, but only just.
Price momentum has been firmly bearish since the pair peaked above 1.1500 and failed to hold the critical level. Daily candles have closed bearish more often than not for the last 14 consecutive trading sessions, or nearly three weeks.
EUR/USD daily chart
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