Written by: Karim Hammam
The Euro/US Dollar exchange rate witnessed relative stability during trading, as investors focused on economic developments and increasing tensions and student protests in France, coinciding with a noticeable rise in global oil prices that directly affect inflation rates.
Oil prices continued their ascent, with Brent and West Texas Intermediate crude reaching high levels of $110 and $101 per barrel, respectively, which in turn led to a clear jump in the average prices of fuel and diesel. These economic indicators confirm that inflationary pressures will continue to remain above official targets for a longer period.
Inflation and US Federal Reserve Policy
These developments came following the release of US inflation data, which showed a rise in the general consumer price index, moving away from the 2% target. In this context, Federal Reserve officials, including Kevin Warsh, hinted that the central bank may not rush to raise interest rates immediately, while analysts await any potential changes based on the performance of the labor market and employment data.
Technical Outlook for the EUR/USD pair
Technically, the major currency pair maintained relative stability within a specific range, supported by some technical indicators and its movement above key support levels. Traders are closely monitoring upcoming economic data, including statements by European Central Bank President Christine Lagarde, as well as purchasing managers' index (PMI) data for the industrial and service sectors, which are likely to provide more clarity on market trends in the coming period.
