The EUR/USD pair started the week on a positive note, bolstered by early gains that carried into Monday’s close. However, as trading resumed on Tuesday in the European session, the pair struggled to extend its recovery momentum, hovering within a tight range above the 1.0700 mark. Investor sentiment remained subdued, with many opting to stay on the sidelines ahead of potential market-moving events.
The US Dollar‘s strength waned during Monday’s European trading hours despite an improved risk appetite. Mixed performance on Wall Street later in the day allowed the greenback to limit losses, thus tempering EUR/USD’s upward potential.
Early indicators on Tuesday showed a cautious market tone as the Euro Stoxx 50 Index dipped over 0.5%, while US stock index futures traded flat. European investors remained watchful ahead of the upcoming first round of the French election, contributing to the overall hesitancy in the markets.
Looking ahead, the US economic calendar will highlight the Conference Board’s Consumer Confidence Index for June. May’s data revealed a slight uptick in consumer confidence, bolstered by positive signals from the labor market. However, recent spikes in weekly Initial Jobless Claims may dampen sentiment if reflected in June’s survey, potentially pressuring the USD lower.
Meanwhile, a lineup of Federal Reserve officials is scheduled to speak later in the day. Following the Fed‘s June policy meeting, divergent views emerged among policymakers regarding the timing of rate adjustments and inflation expectations. Market expectations, as reflected by the CME Group FedWatch Tool, indicate a 32% probability of the Fed holding rates steady in September. Any hawkish signals from Fed officials could provide further support for the USD, potentially boosting its strength in the near term.
In summary, EUR/USD remains confined within a narrow trading band above 1.0700 amidst cautious market sentiment and upcoming economic events that could influence currency dynamics.
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