EUR/USD Oscillates Amid Inflation Uncertainty, GDP Anticipation

The US Dollar is increasing in value during this morning’s Asian session by 0.20%, continuing the bullish trend from yesterday. The price of the Dollar Index rose to a 15-day high and rose above the 103.00 psychological pricing for investors. Various factors within the US support the price of the Dollar, but also continue to be supported by weak data from the UK and Europe. Investors throughout the day will mainly be concentrating on European inflation and the US Gross Domestic Product later in the afternoon. 

Investors will at first be turning their attention to Spanish inflation data, which read slightly higher than expectations. Analysts were expecting the Spanish Flash inflation data to read 1.7%. However, the official figure read 1.9%. The inflation data was slightly higher but finally dropped below the target of 2%, much lower than the previous 3.2% seen in May. However, the price of the Euro rose significantly as the official inflation rate was 0.2% higher than expected. 

Over the past 24 hours, investors are also considering the latest public discussion between the world's most significant four central banks. The panel discussion occurred between the Federal Reserve, European Central Bank, Bank of Japan and Bank of England. The main comments that grabbed investors' attention were the Federal Reserve Chairman’s comments on the monetary policy. Jerome Powell says more interest rate hikes are coming, and the possibility of two hikes taking place consecutively exists. The chairman also advised investors there is no risk of raising interest rates too quickly. Both comments were deemed as generally bullish. 

EUR/USD Oscillates as Inflation Remains Uncertain

The Euro started the day with a decline continuing its bearish trend from yesterday, but the currency gained after the release of Spanish inflation. The price of the Euro against the US Dollar has risen by 0.21% since the release of Spanish inflation. However, investors should note that the price of the US Dollar has been on the rise this morning. In addition, the exchange rate's price has not yet crossed into a “higher high”. Therefore investors will potentially seek further confirmation before speculating on a price increase. 

EUR/USD 15-Minute Chart on June 29th 

The further drive may be derived from the German Consumer Price Index, which will be confirmed by 15:00 GMT+3. Markets expect the German CPI data to be the most influential data for the Euro today. Investors expect the monthly inflation data to read 0.2%, higher than last month but lower than the previous five months. If the German inflation data also read higher than 0.2%, investors will believe the central bank may continue to hike. As a result, the Euro may continue to find support. However, lower German inflation will likely push the European Central Bank towards a pause. As a result, the Euro may be pressured. 

The Dollar, on the other hand, will largely depend on this afternoon’s Gross Domestic Product. Economists expect the US GDP figure to read 1.4%, which signals a significant slowdown in economic growth. However, the data would indicate economic growth and no significant pressure on the monetary policy. The Dollar can be supported if the data comes in at 1.4% or above. In addition, investors will monitor the weekly Unemployment Claims Count, which will have a lesser impact. 

Investors looking to trade in favour of the Euro will aim for higher-than-expected German inflation data, a lower US GDP figure, and a breakout above the 1.09232 level. 

NASDAQ - GDP and PCE Price Index in Focus

The NASDAQ did indeed experience positive price movements, as analysed during yesterday’s market analysis. However, the price action also indicated that selling pressures remain. The index increased to a 1-week high and ended the day higher than the open price. However, investors experienced significant corrective ways at times. Only two of the NASDAQ’s top 30 influential stocks declined during yesterday’s trading. The largest price increase from the top 30 companies was Advanced Micro Devices, which rose by a moderate 1.17%. However, none of the top 10 stocks increased more than 0.60%. Ansys Inc. experienced the most substantial decline, dropping 5.23%.

The main price driver for the index is likely to be the GDP data, as mentioned above, and the PCE Price Index. The PCE Price Index measures inflation for goods and services mainly purchased within the month. Ideally, investors will be looking to see a GDP data of 1.4% and a PCE Price Index of 0.1%-0.2%. This would indicate economic growth and declining inflation which can support the stock market. At the same time, slightly lower GDP data paired with a PCE Price Index above 0.3% would indicate a weakening economy and more hikes to come.

NASDAQ 20-Minute Chart on June 29th 

Summary:

• The US Dollar Index increases in value, continuing the bullish price movement from yesterday. However, the index comes under pressure from higher Spanish inflation. 
• Spanish inflation read 1.9%. The inflation rate is higher than markets expected but declined below the ECB’s target for the first time since March 2021.
• Investors turn their attention to the US Gross Domestic Product and German Inflation data. 
• Jerome Powell says more interest rate hikes are coming, and the possibility of two hikes taking place consecutively exists. 
• The pricing of the NASDAQ will largely depend on the PCE Price Index and economic growth data.