- The dollar eased after data revealed that the PPI increased by a smaller 0.1% in July.
- The likelihood of a 50 bps Fed rate cut in September rose from 50% to 53.5%.
- Economists expect an ECB rate cut in September and December.
The EUR/USD price analysis supports a bullish bias as the euro climbs against a weak dollar after soft US wholesale inflation numbers. Meanwhile, a Reuters poll revealed that economists predict two more European Central Bank cuts this year, fewer than markets expect.
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The dollar eased after data revealed that the US PPI increased by 0.1% in July. Meanwhile, analysts had expected a 0.2% increase. The more minor increase indicates weakening price pressures at the producer level.
After the report, markets raised the likelihood of a 50 bps Fed rate cut in September from 50% to 53.5%. The move was little because the focus is now on the upcoming consumer inflation report.
The CPI will likely increase by 0.2% in July. Meanwhile, the annual rate could stay unchanged at 3.0%. However, since the recent trend is weaker-than-expected numbers, the dollar might fall further. Moreover, if consumer inflation misses forecasts, the likelihood of a 50 bps rate cut in September will increase. Meanwhile, a weak dollar will allow the euro to continue climbing.
Elsewhere, a Reuters poll revealed that economists maintained their forecast for two more ECB rate cuts this year. An over 80% majority expect a rate cut in September and December. This survey boosted the euro because it is a less dovish outlook than what markets expect. Traders are betting on three more ECB cuts before the year ends.
EUR/USD key events today
- Core CPI m/m
- CPI m/m
- CPI y/y
EUR/USD technical price analysis: Bulls seek new high above 1.1000
On the technical side, the EUR/USD price is on the brink of making a new high above the 1.1000 psychological resistance level. The bullish bias is strong, with the price well above the 30-SMA. At the same time, bulls are pretty enthusiastic with the RSI in the overbought region.
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Therefore, there is a high chance the price will breach 1.1000 to make a higher high. On the other hand, if the resistance holds firm, EUR/USD might pull back to retest the 30-SMA before continuing higher. The bias will only shift if it goes below the SMA.
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Saqib Iqbal
