EUR/USD: Will the inflation data be able to refuel Dollar's momentum?

Vasilis Tsaprounis Independent Analyst

The single European currency remains above the 1,07 levels, in a narrow trading range pending US inflation data.

Efter an extremely quiet Monday where the trading range remained slightly above and below the 1,07 levels the markets today expect with interest two important macroeconomic news, the development path of the Eurozone economy for the last quarter of 2022 and the announcement on the inflation price for consumers in US.

The European currency avoided further losses after the new estimates for the prospective growth of the European economy for 2023 where they were revised slightly upwards.

Now the chances of the European economy entering a recessionary environment are getting more and more smaller.

The significant de-escalation in natural gas prices is the main reason behind the latest upgrades as the energy crisis has been averted for now and the chances of it coming back do not look great.

For my part I would keep more conservative thinking as the mild winter that can very easy change and the Ukrainian front which seems that many they have forgot it for now could very easily bring back the concerns.

In this environment the exchange rate remains below under confusion as after the latest upward dynamics of the US currency the pair is in a temporary balance making it difficult to find a further strong direction.

For this reason the announcement later in the day on the course of inflation in the US is awaited with particular interest and any surprise is capable of leading the pair to significant and intense movements.

Possible increased prices for inflation are expected to give fresh feed to scenarios for a more aggressive policy from the Fed , something is capable of refueling a new dynamic for the US currency.

In view of such announcement a wait-and-see attitude would be the suggested behavior.

Author

Vasilis Tsaprounis

Independent Analyst

Vassilis Tsaprounis possesses over 25 years of professional experience in Capital Markets and especially in the foreign exchange market.

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