EUR/USD juggles below 1.0850 as focus shifts to US PPI and Retail Sales data
|- EUR/USD oscillates below 1.0850 amid a holiday in the United States market.
- The US Dollar Index (DXY) is looking to drop below the immediate support of 101.75 amid an upbeat market mood.
- The release of the US PPI and Retail Sales will provide decisive moves in the asset ahead.
The EUR/USD pair is struggling to find any direction as the United States markets are closed on Monday on account of Martin Luther King’s Birthday. The major currency pair is juggling below 1.0840 as investors have shifted their focus toward the release of the United States Producer Price Index (PPI) and Retail Sales data.
S&P500 futures witnessed marginal selling pressure in early Asia but have recovered their losses and turned positive, portraying an improvement in investors’ risk appetite. The US Dollar Index (DXY) is looking to drop below the immediate support of 101.75 amid an upbeat market mood.
Last week, the USD Index witnessed immense pressure after a slowdown in December’s Consumer Price Index (CPI) in the United States, which bolstered the case of a more minor interest rate hike announcement by the Federal Reserve (Fed) ahead. Going forward, the USD Index could continue its downside trend for longer as the Fed will look to pause policy tightening.
According to economists at Wells Fargo, an end to monetary tightening should bring the US Dollar's gains to an end by early 2023. Indeed, we believe a peak in the trade-weighted US Dollar for the current cycle has already been reached.” They forecasted a more pronounced pace of USD depreciation in 2024 once the Fed begins cutting its policy interest rate by early next year.
On Wednesday, investors will focus on the release of the US Producer Price Index (PPI) data. The street is expecting a decline amid lower gasoline prices, providing producers room to trim prices at factory gates due to lower production costs. Also, a reduction in retail demand will be equalized by lower prices. Apart from that, Retail Sales data will be keenly focused.
Meanwhile, Eurozone investors are cheering Germany’s preliminary Gross Domestic Product (GDP) expanded by 1.9% on an annualized basis in 2022 compared to the +1.8% market consensus and +2.6% the prior release.
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