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EUR/USD Climbs Above 1.0900 Ahead Of Fed Minutes And NFP Data
The EUR/USD maintains a defensive stance following three consecutive quarterly advances. Euro pair's recovery is supported by the market's lack of conviction in the Fed's hawkish bias and milder US inflation indicators. Despite less market acceptance, the EUR/USD exchange rate is also propelled by ECB policymakers' defence of rate rise hints. The US ISM Manufacturing PMI, the final Eurozone and German HCOB PMI readings for June, and the German HCOB PMI are closely watched for intraday direction.
EUR/USD struggles to defend its previous weekly, monthly, and quarterly gains as traders start the week cautiously around 1.0910-1.0915 during Asia's early Monday session. In doing so, the Euro/U.S. dollar pair reassesses the recent odds favouring buyers advance of the most important US data/events.
The preferred inflation gauge of the Federal Reserve (Fed) prompted hawkish expectations from the US central bank on Friday with the smallest annual gain in six months. After a slew of Fed statements earlier in the week, the absence of any significant hawkish comments from US central bank officials bolstered the EUR/USD bulls. Nevertheless, the primary currency pair ended the previous week, month, and quarter with gains.
Nevertheless, the US Personal Consumption Expenditure (PCE) Price Index for May came in at 0.3% MoM and 4.6% YoY compared to market expectations of 0.4% and 4.7% for monthly and annual prior readings.
In contrast, the preliminary Eurozone HICP increased to 0.3% MoM compared to 0.0% expected and 0.0% previously, while the annual figures decreased to 5.5% from 5.6% market forecasts and 6.0% previous measurements. In addition, the Core HICP weakened to 0.3% MoM and 5.4% YoY from 0.7% and 5.5% expected respectively, compared to 0.2% and 5.5% previously.
Notably, the European Central Bank (ECB) attempted to defend their rate hike bias, but softer inflation data and looming concerns of a German recession prevent markets from believing them, putting pressure on EUR/USD bulls. Alternatively, the US data are not particularly remarkable, but the Fed's policymakers are more hawkish and have been well received.
Therefore, EUR/USD traders may struggle to prolong the recent recovery if this week's Federal Open Market Committee (FOMC) Monetary policy meeting Minutes and US employment report provide bullish signals. It is worth noting that today's final readings of Germany and Eurozone HCOB PMIs for June, as well as the US ISM Manufacturing PMI for the same month, will provide intraday traders with a source of entertainment.
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