15/07/2024
📊 Euro slips after an assault on Donald Trump
EURUSD rose by 0.35% on Friday, reaching the resistance level of 1.09000 and closing the trading day slightly above it, following the release of U.S. Producer Price Index (PPI) data.
👉 Possible effects for traders
U.S. producer prices rose by 2.6% year-over-year in June 2024, marking the highest increase since March 2023. The PPI numbers accelerated from the previously reported 2.4% in May, which was also higher than the forecast of 2.3%. Producer prices increased by 0.2% on a monthly basis, significantly exceeding estimates of 0.1%. Still, the euro managed to recover from the initial correction that started after the report was released and reached 1.09100. Based on the Fed funds futures data from the CME Group, there is a 92.4% probability that the Federal Reserve (Fed) will ease monetary policy at its September meeting. Economists also anticipate a soon rate reduction from the U.S. central bank. However, the market's uncertainty around inflation has increased. If inflation spikes unexpectedly, it could significantly impact asset prices and the outlook for the euro.
The shock over the assassination attempt of former U.S. President Donald Trump has been driving markets on this Monday. Traders' initial reaction has been to purchase the U.S. dollar and Bitcoin and sell longer-term U.S. Treasuries, leading to a 10-year Treasury bond price decline. The sell-off happened due to the expectation that Donald Trump's economic policies could accelerate inflation and increase debt levels. Today, the President of the European Central Bank (ECB), Christine Lagarde, will give a speech. However, this week's most important event is the upcoming ECB decision on interest rates. The decision is unlikely to surprise the markets, as there is a 95% probability that the interest rate will stay at 3.75%. Thus, more economic data will be crucial in determining the timing of the next interest rate reduction.
On Monday, EURUSD gapped downwards at 1.00870 and has been trading within a range of 1.08850 to 1.08950 throughout the Asian and early European trading sessions. Today, Christine Lagarde will give a speech in Brussels that may affect the euro's exchange rate. Traders should also pay attention to the U.S. Empire State Manufacturing Index at 12:30 p.m. UTC and the speech given by Fed Chairman Jerome Powell at 4:00 p.m. UTC.
