The EUR/USD pair experienced continued downward pressure on Monday, dropping to the 1.0200 mark for the first time since late 2022, reaching a new 26-month low before staging a modest recovery later in the day.
European economic data remains lackluster throughout the week, with the European Central Bank (ECB) poised to continue cutting interest rates. This will likely widen the interest rate gap between the Euro and the US Dollar. Midweek inflation reports for the Eurozone and Germany are expected to closely mirror preliminary data, offering little in the way of surprises.
Meanwhile, U.S. economic data will take the spotlight, starting with the Producer Price Index (PPI) on Tuesday, which is forecasted to rise to 3.7% year-on-year in December, up from the previous 3.4%. The U.S. Consumer Price Index (CPI) report due Wednesday is also anticipated to edge higher to 2.8% from 2.7%, while U.S. Retail Sales data will be released on Thursday.
EUR/USD Outlook
EUR/USD remains entrenched in a bearish trend, on track for a fourth consecutive month of losses. Although the pair briefly touched the 1.0200 level, the persistent downtrend suggests that further declines are more likely than a reversal in the near term. The recent price action indicates a continuation of bearish momentum rather than signaling a potential recovery.
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