EUR/USD improves as Powell recognizes potential threats to US efforts to energize markets

• EUR/USD features in a good zone above 1.0800 due to multiple tailwinds.
• Fed Powell’s warning on the United States exchange market has pushed the United States Buck on the backfoot.
• The euro is characterized as the defeat of wage fair reduces the threats to increase the French monetary position.

EUR/USD is sideways to around 1.0800 in Wednesday’s US consultation, which is a slight corrective move from the four-week top of around 1.0850. The largest currency pairs move to the sidelines as investors await United States (US) Consumer Price Index (CPI) data for June, which will be published on Thursday.

Economists are expecting core inflation, which excludes risky foods and effort pieces, to rise 0.2% and 3.4% in June on a month-on-month and annual basis, respectively. Annual headline inflation is estimated to have declined to 3.1% from 3.3% in May, while the per 30-day figure is expected to rise by 0.1%, pretty much unchanged from the past.

Inflation data will provide an indication of whether expectations of a wave of interest rate cuts by the Federal Reserve (Fed) to begin cutting interest rates at its September meeting are favourable.

Meanwhile, Fed Chair Jerome Powell indicated in his comments at semi-annual congressional testimony on Tuesday that a rate cut is not appropriate until policymakers gain significant confidence that inflation will remain at the required rate of 2%. Not far from the way back. ,

On the other hand, Powell warned about easing US financial energy as investment markets are losing momentum. “Labor market conditions have cooled significantly compared to two years ago,” Powell said, adding that the United States is “no longer an overheated economy.”

Daily Digest Marketplace Movers: EUR/USD rises as A Ways Right fails to win majority

• EUR/USD held on to gains above 1.0800, driven by a weaker US Buck (USD) and a value fix in the Euro, as the far-right National Rally led by Marine Le Pen failed to win an absolute majority in the French elections . The US Dollar Index (DXY), which tracks the value of the dollar against six major currencies, faces pressure to rise above 105.20.
• The far-right missed out on an absolute majority, despite being well-informed in the early rounds to stoke fears of a broader increase in the French monetary situation. On the other hand, hesitations about fiscal changes and distribution of ministries are at the top because the economic system can be administered through the coalition executive. Economists are expecting French President Emmanuel Macron’s centrist coalition to join hands with the left, often cited as an untapped political gateway, led by Jean-Luc Mélenchon.
• Meanwhile, diminishing expectations of the next duty cut through the EU Central Bank (ECB) keep the euro on an entry basis. ECB policymakers have avoided going down the pre-determined rate-cutting path, fearing that a competitive coverage expansionary stance could be counterproductive to the deflation process.
• On Tuesday, ECB Governing Council member and Italy’s warehouse governor Fabio Panetta said the central bank could gradually lower interest rates without further pause to ease inflationary pressures. Panetta said that policy tightening is having an impact on demand, production and inflation.

Technical Research: EUR/USD trades within a linear triangle formation

EUR/USD trades in a sweet zone well above the round-level support at 1.0800 as buyers stay ahead of the United States CPI record for June. The largest currency pair remained stable above the 20-day and 50-day exponential moving averages (EMA), which traded around 1.0750 and 1.0770, respectively. The overall trend of the shared currency pair is also bullish as it has risen above the 200-day EMA, which trades around 1.0800.

The formation of a linear triangle on the day-to-day time frame indicates a well-formulated volatility contraction, symbolized by low volume and thin ticks.

The 14-day Relative Energy Index (RSI) reaches 60.00. Should the bullish momentum accelerate if it breaks above 60.00?