EUR/USD appreciates to near 1.0400 ahead of Eurozone HICP inflation
- EUR/USD rises as the US Dollar corrects downwards ahead of ISM Services PMI due later in the North American session.
- The US Dollar could receive some support after President-elect Trump stated that his tariff policy will not be scaled back.
- Traders await the preliminary Eurozone HICP inflation data for December scheduled to be released on Tuesday.
EUR/USD continues its winning streak for the third successive session, trading around 1.0400 during the Asian hours on Tuesday. The upside of the EUR/USD pair is attributed to the subdued US Dollar (USD). Later in the day, the US ISM Services Purchasing Managers Index (PMI) is set to be released. On Wednesday, markets will focus on the Minutes from the Federal Reserve's (Fed) December policy meeting.
The US Dollar Index (DXY), which tracks the USD's performance against six major currencies, remains under pressure for the third straight session, trading near 108.20 at the time of writing. However, the Greenback may find some support following President-elect Donald Trump's comments that his tariff policy will not be scaled back.
Trump refuted a Washington Post report suggesting his team was considering limiting the scope of his tariff plan to only cover specific critical imports. Traders are expected to closely watch developments related to Trump's tariff strategy.
The Euro gained support from stronger European inflation data released on Monday. Germany's Consumer Price Index (CPI) rose to 2.6% in December, up from 2.2% in November, surpassing expectations of 2.4%, and marking its highest level in nearly a year. This represented the third consecutive monthly increase in German inflation.
In addition, stronger-than-expected PMI data from Spain, Italy, France, Germany, and the Eurozone likely supported the Euro. These reports reinforced expectations that the European Central Bank (ECB) would proceed cautiously with interest rate cuts, leading traders to slightly reduce their bets on more aggressive easing.
Economic Indicator
Harmonized Index of Consumer Prices (MoM)
The Harmonized Index of Consumer Prices (HICP) measures changes in the prices of a representative basket of goods and services in the European Monetary Union. The HICP, released by Eurostat on a monthly basis, is harmonized because the same methodology is used across all member states and their contribution is weighted. The MoM figure compares the prices of goods in the reference month to the previous month. Generally, a high reading is seen as bullish for the Euro (EUR), while a low reading is seen as bearish.
Read more.Next release: Tue Jan 07, 2025 10:00 (Prel)
Frequency: Monthly
Consensus: -
Previous: -0.3%
Source: Eurostat
Author
Akhtar Faruqui
FXStreet
Akhtar Faruqui is a Forex Analyst based in New Delhi, India. With a keen eye for market trends and a passion for dissecting complex financial dynamics, he is dedicated to delivering accurate and insightful Forex news and analysis.
