EUR/USD: Euro Drifts Higher in Third Straight Day as Forex Markets Await April Inflation Data

Expected cooldown in consumer prices chipped away at dollar’s value. Any surprises may send the euro-dollar scrambling.

• The EURUSD pair was rising for a third straight day Wednesday with traders largely dumping the dollar ahead of a key data release. It’s Inflation Day and the US will report its consumer price index figure for April. There’s a lot at stake — the reading will help direct the Federal Reserve’s next step on the path to lower interest rates. Analysts have set expectations for a 3.4% increase, down from 3.5% in March.
• A big leap above that figure may derail the positive developments in global markets. But an expected drop in price pressures will most likely solidify hopes of an interest rate cut sooner rather than later. The Fed has previously said it’s monitoring all incoming data and will decide when — or if — it’s a good idea to cut borrowing costs.
• In that context, the euro topped $1.08 and is on track to jump above the 100-day moving average, indicating mid-term bullishness. It’s already eclipsed the 50-day line and the 200-day line. But it’s not a done deal yet — it all hinges on what the CPI report shows today.