EUR/USD bounced back on Friday, surging to 1.0840 after a market shift towards risk-on sentiment. This turnaround came after the US ISM Manufacturing PMI unexpectedly dropped, fueling hopes for potential rate cuts by the Federal Reserve.
The latest Monetary Policy Report from the Fed indicated growing confidence in reaching the 2% inflation target. Additionally, Euro sentiment received a boost as European Harmonized Index of Consumer Prices (HICP) inflation declined less than anticipated in February.
In other market movements:
- Pan-European Core HICP inflation surpassed expectations, printing at 3.1% YoY.
- Headline HICP inflation slipped to 2.6% YoY, slightly below forecasts.
- US ISM Manufacturing PMI for February fell to 47.8, missing expectations.
- University of Michigan’s Consumer Sentiment index for February decreased to 76.9.
- ISM Manufacturing Prices Paid for February also declined to 52.5.
Looking ahead:
- Next week features another US Nonfarm Payrolls (NFP) release on Friday, with the ADP Employment Change preview scheduled for Wednesday.
- The European Central Bank (ECB) will announce its latest rate decision on Thursday.
EUR/USD technical analysis:
- The currency pair recovered from recent lows around 1.0800 to reach 1.0840.
- EUR/USD has been range-bound between 1.0860 and 1.0800 for the week.
- It remains close to the 200-day Simple Moving Average (SMA) at 1.0830, showing a modest increase from early February’s low of 1.0695.