The Euro slides for a second day against the US Dollar as markets digest recent US economic data, revealing a still-strong economy despite signs of slowing momentum. Currently, EUR/USD is down 0.12% at 1.0830. While the revised Q4 GDP reading showed a slight decline, recent drops in Retail Sales and Durable Goods Orders suggest the economy may be losing steam.
Traders are now intensely focused on January inflation figures, specifically the Federal Reserve’s favored metric, the Personal Consumption Expenditure (PCE). Forecasts anticipate a slowdown in both headline (2.4% YoY) and Core PCE (2.8% YoY). Softening inflation could trigger more aggressive market expectations for Fed rate cuts later in 2024.
Meanwhile, the Eurozone economy stagnates, with February’s Economic Sentiment declining further. Analysts at ING see no meaningful improvement in sight for the first quarter. Upcoming Eurozone inflation releases (Harmonized Index of Consumer Prices and Core HICP) will likely influence EUR/USD sentiment.
Technically, EUR/USD remains rangebound but has managed to hold above the 200-day moving average (DMA) at 1.0827. A sustained close above this level could open the door towards the 50-DMA at 1.0878 and potentially 1.0900. Conversely, a daily close below the 200-DMA could trigger a move towards the 1.0800 mark.