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The EUR/USD currency pair halted its three-day decline, bouncing back above the 1.0350 level as capital rotated away from the US dollar. Market participants appear less concerned about recent trade policy rhetoric, focusing instead on the Federal Reserve's commitment to maintaining its current monetary policy framework. Fed Chair Jerome Powell emphasized the central bank's intention to base decisions on concrete economic indicators rather than political developments.
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European economic indicators remain light this week, with German HICP data and EU-wide GDP figures scheduled for later in the week. These releases typically generate limited market reaction as they represent final readings rather than preliminary estimates. Market participants have generally priced in consensus forecasts well before official publication dates.
Market Focus: US Inflation Data Takes Priority This Week
Wednesday's US Consumer Price Index report stands as the most significant market-moving event this week. Economists anticipate headline inflation to remain steady at 2.9% year-over-year, while core CPI may show modest cooling to 3.1%. Thursday's Producer Price Index figures could provide additional context about business-level price pressures, with expectations pointing toward a slight deceleration in annual growth rates.
Technical Outlook for EUR/USD
The currency pair found support near recent lows, pushing back above the 1.0350 handle. While this interrupts the recent downward trajectory, technical indicators suggest limited upside potential in the near term. Resistance persists around the 50-day moving average near 1.0430, creating a well-defined trading range for market participants.
Market Sentiment and Positioning
Recent Commitment of Traders reports indicate shifting positioning among institutional investors, with some reduction in extreme USD long positions. This rebalancing contributes to the current EUR/USD rebound, though sustained upward movement would require clearer signals about relative economic performance between the Eurozone and United States.
