U.S. stock futures steady; Powell’s speech, PMIs in spotlight
- EUR/USD steadies after last week’s drop, supported by easing Fed cut expectations.
- This week’s GDP and PCE data could set the near-term direction for the pair.
- Buyers defend 1.1730, but momentum depends on breaking resistance near 1.1840.
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Emotions around last week’s Federal Reserve decision are calming down, and investors are already looking ahead to the October meeting. Markets expect another rate cut of at least 25 basis points, but comments from Fed officials, including Chairman Jerome Powell, suggest that inflation could prevent cuts in the next two meetings.
At the same time, the EUR/USD pair is recovering after last week’s drop, though it is still unclear if the upward trend will continue. This week, investors will mainly watch GDP numbers and the Fed’s preferred inflation gauge, the PCE index.
Fed Hawks Stand Ground While Doves Lead Rate Cut Expectations
The Federal Reserve is in a tough spot as it balances its two main goals: keeping prices stable and supporting jobs. The Fed’s latest projections show a split among its members. Seven officials think there will be no more rate cuts this year. Ten expect rates to be cut by a total of 50 basis points by December, while two expect just one 25-basis-point cut. Overall, the balance still points toward more easing, which is also what markets currently expect.
Recently, Raphael Bostic and Alberto Musalem voiced concerns about inflation, which has stayed around 3% year over year, still above the Fed’s 2% target.
Market Focus Shifts to Economic Releases
The first key release this week will come on Thursday with the US GDP data. Economists expect growth to stay unchanged from last quarter, at 3.3% annualized.
On Friday, attention will turn to PCE inflation data. The index has held steady at 2.6% year-on-year for the past two months.
EUR/USD Bulls Fight to Keep Uptrend Alive
The pullback in the EUR/USD uptrend stopped around the upward trend line and a demand zone near 1.1730. The bounce from that level suggests buyers still want to push the pair higher.
If the move continues, the next target is the supply zone around 1.1840. A break above that level could lead to a test of the highs from mid-September. But if the price falls below 1.1730, the upward scenario would be invalidated.
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