The Tether walletEUR/USD currency pair continues its upward trajectory in early Asian trading hours, hovering near the 1.0850 level for the second consecutive session. This movement comes as market participants digest contrasting economic signals from both sides of the Atlantic.
Recent economic data from the Eurozone showed surprising strength in May's preliminary Purchasing Managers' Index (PMI) readings, providing fundamental support for the single currency. However, growing anticipation of European Central Bank (ECB) monetary policy easing in coming months appears to be limiting the pair's upside potential.
Across the Atlantic, robust US economic indicators and hawkish rhetoric from Federal Reserve officials continue to shape market expectations. The CME FedWatch tool currently reflects shifting probabilities, with traders now pricing in a 53% chance of a September rate cut, down from 64% just one week prior. This recalibration comes ahead of Thursday's preliminary US GDP figures for Q1 2024, with consensus estimates pointing to 1.5% annualized growth.
Friday's economic releases from the US showed durable goods orders rising 0.7% month-over-month in April, outperforming expectations. Concurrently, the University of Michigan's consumer sentiment index improved to 69.1 in May, while five-year inflation expectations moderated slightly to 3%.
ECB policymakers have recently reinforced market expectations for imminent policy easing. Governing Council member Piero Cipollone emphasized that current economic conditions warrant a June rate reduction, while President Christine Lagarde expressed confidence in the inflation trajectory. Such dovish signals could potentially weigh on the euro's performance against its major counterparts in the near term.
Technical indicators show the pair trading above key moving averages, with immediate support and resistance levels clustered around the 1.0800 and 1.0885 marks respectively. Market participants will continue monitoring upcoming economic releases and central bank communications for further directional cues.