A Big Day of European Data Lands on Thursday

A large data dump from Europe’s largest economies could spark life into the EURUSD exchange rate

EURUSD – Daily Chart

EURUSD – Daily Chart

EURUSD has found support at the 1.0845 level but has struggled to gain real traction as traders need clarification about the path of interest rates. 

The data starts on Wednesday at 9:30 pm HKT, with US growth figures released. That is expected to decline from 4.9% to 3.3% for the quarter and could be a headwind for the US dollar. 

The next day has data starting at 3:45 pm HKT with French inflation for February. That is expected to dip to 2.7%, which would help European rates cut expectations. German unemployment comes in at 4:55 pm with a possible rise in jobless numbers on the euro. 

The data will continue into the evening with 9 pm inflation from Germany and PCE inflation for the United States. 

With prices coming down in the US and Europe, there is potential for rate cuts by the major central banks. However, the US economy is stronger and can afford to hold rates steady for longer. 

That theory could be tested if the US economy shows a steeper decline, raising slowdown fears and seeing traders’ pricing in earlier US interest rate cuts. 

JPMorgan equity analyst Marko Kolanovic holds firm to his view that investors are far too optimistic about the strength of the US economy and the outlook for US equities. 

“We believe that there is a risk of the narrative turning back from goldilocks towards something like 1970s stagflation, with significant implications for asset allocation,” Mr Kolanovic wrote.

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