February 18, 2024 – The EUR/USD pair exhibited a sideways trend on Friday, with limited movement as traders braced for the week’s close amid lackluster market conditions. The Euro (EUR) faced a dearth of significant economic data until next week’s Purchasing Manager’s Index (PMI) figures, while US markets, closed for the President’s Day holiday on Monday, left traders waiting for clues from the Federal Reserve (Fed) Meeting Minutes scheduled for Wednesday.
The Euro struggled to gain traction as US data provided little fodder for market participants, with the US Producer’s Price Index (PPI) unexpectedly rising on Friday. The US Core annualized PPI exceeded expectations, reaching 2.0% for the year ending in January, surpassing the forecasted 1.6% and the previous period’s revised 1.7%. Monthly PPI for January accelerated by 0.3%, surpassing the expected rebound to 0.1% from the previous month’s -0.1%. The Michigan Consumer Sentiment Index rose to 79.6 for February, slightly below the forecast of 80.0 from January’s 79.0. The University of Michigan’s 5-year Consumer Inflation Expectations survey held steady at 2.9% in February.
Persistent inflation concerns, coupled with producer-level inflation, posed a challenge for investors hoping for rate cuts from the Fed. The upcoming release of the Federal Open Market Committee’s (FOMC) Meeting Minutes on Wednesday is anticipated to provide insights into the central bank‘s stance on potential interest rate adjustments.
From a technical perspective, EUR/USD grappled with building bullish momentum, hovering around the 200-hour Simple Moving Average (SMA) near 1.0760. The pair faced resistance in reclaiming the 1.0800 handle, testing both upward and downward movements on Friday. EUR/USD, poised to close below the 200-day SMA near 1.0830 for the tenth consecutive trading day, grappled with bearish pressures, marking a decline of over 3% from December’s peak bids near 1.1140.
As traders navigate through the consolidation phase, attention is keenly focused on upcoming events, including the release of the Federal Reserve’s Meeting Minutes and Eurozone Purchasing Manager’s Index data, to provide potential catalysts for the EUR/USD pair in the coming week.
