EUR/USD Slides to Around 1.0840 Amid Rising Middle East Tensions, Focus on Eurozone GDP Data

  • The EUR/USD pair experiences losses as traders exercise caution amid heightened tension in the Middle East.
  • ECB’s Guindos suggests policy easing could be considered if inflation aligns with the central bank’s 2.0% target.
  • Investors speculate on potential Fed policy easing as inflation shows signs of cooling.
  • During Monday’s European trading session, the EUR/USD pair declines, approaching the 1.0840 level. The prevailing risk-off sentiment, fueled by increased geopolitical tensions in the Middle East, prompts traders to favor the US Dollar (USD), exerting downward pressure on the EUR/USD pair.

Following the European Central Bank (ECB) interest rate decision on Thursday, the Euro (EUR) faces downward pressure. The ECB opted to maintain its Main Refinancing Operations Rate at 4.50% and the Deposit Facility Rate at 4.0%. Additionally, ECB governing council member Klaas Knot stated on Sunday that the central bank requires evidence of slowing wage growth in the Eurozone before contemplating interest rate cuts.

However, market expectations for ECB rate cuts have risen, with bets on a 50 basis points (bps) reduction by June and a 140 bps cut by December 2024. On the data front, the quarterly Gross Domestic Product (GDP) for the Eurozone and Germany is scheduled for release on Tuesday.

ECB Vice President Luis de Guindos has stated that the ECB will consider cutting interest rates when there is confidence that inflation aligns with the central bank’s 2.0% goal. He emphasized positive developments in inflation recently, indicating that these favorable trends would eventually be reflected in the ECB’s monetary policy.

The US Dollar Index (DXY) maintains stability around 103.50, with subdued 2-year and 10-year US Treasury yields at 4.33% and 4.11%, respectively, at the time of writing. Investors are betting on the speculation that the Federal Reserve (Fed) could implement policy easing as the US Core Personal Consumption Expenditures Price Index (PCE) data indicates a cooling off of inflation.

Traders are expected to closely monitor crucial economic indicators, especially Tuesday’s releases of the US Housing Price Index and Consumer Confidence figures, to gain additional insights into the market. This scrutiny is anticipated to intensify following the forthcoming Federal Open Market Committee (FOMC) statement on Wednesday.

EUR/USD: IMPORTANT LEVELS TO WATCH

OVERVIEW
Today last price1.0838
Today Daily Change-0.0016
Today Daily Change %-0.15
Today daily open1.0854
TRENDS
Daily SMA201.0917
Daily SMA501.092
Daily SMA1001.0777
Daily SMA2001.0844
LEVELS
Previous Daily High1.0886
Previous Daily Low1.0813
Previous Weekly High1.0932
Previous Weekly Low1.0813
Previous Monthly High1.114
Previous Monthly Low1.0724
Daily Fibonacci 38.2%1.0858
Daily Fibonacci 61.8%1.0841
Daily Pivot Point S11.0816
Daily Pivot Point S21.0778
Daily Pivot Point S31.0743
Daily Pivot Point R11.0889
Daily Pivot Point R21.0924
Daily Pivot Point R31.0962

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