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Mar 26 - 11:55 AM

EUR/USD - COMMENT-Data Gives EUR/USD Longs Hope But US Reports Still Key

By Christopher Romano  —  Mar 26 - 10:00 AM

EUR/USD rallied above the 200- and 55-DMAs Tuesday with help from better than expected German data, but it's looming U.S. inflation and employment reports that may have a more significant impact.

German consumer confidence is expected to slowly improve in April according to GfK survey.
April's result came in at -27.4 versus -27.8 estimates while the prior was revised up to -28.8 from -29.0.

The report helped erode some of the dollar's yield advantage over the euro as German-U.S.
2-year spreads US2DEE2=RR, which EUR/USD is correlated with, extended recent tightening.

EUR/USD bulls appeared cautious, however, as U.S. February PCE, the Fed's favored inflation gauge, and weekly claims reports loom.

EUR/USD longs will need below-estimate PCE and above-estimate claims reports to gain some traction.

In that scenario the Fed may be able to take a dovish lean and maintain their median outlook for three rate cuts in 2024.

Should PCE come in well-below estimates and claims spike up the Fed could become more dovish going forward, potentially putting the U.S. central bank on a more aggressive rate cutting course than the ECB.

EUR/USD bulls could then rally the pair towards 1.1100.

For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary

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