Euro Stuck Near Lows
The euro remained weak against the US dollar on Thursday (June 25th), extending its decline for the fourth consecutive day. EUR/USD briefly touched a 13-month low of 1.1324 on Wednesday, then attempted to recover, but remained stuck below the 1.1370 level. This pressure indicates that buying interest in the euro remains limited amidst the strong US dollar and weak economic data in the eurozone.
One factor weighing on the euro is German consumer confidence data, which has not shown a strong recovery. The GfK consumer confidence index for July rose slightly to -29.2 from -29.7 in June, but remained below market expectations. The Nuremberg Institute for Market Decisions assessed that consumer sentiment is stabilizing, but remains at a low level due to weak spending and a high propensity to save.
This condition signals that German households remain cautious in spending their money. Although income expectations have improved slightly, most consumers still view the future economic outlook pessimistically. This situation puts pressure on the euro because Germany is the largest economy in the eurozone, so weak household consumption could hamper the region's economic recovery.
On the other hand, the US dollar remains supported by expectations of a Federal Reserve interest rate hike. The market is awaiting the release of US Personal Consumption Expenditures (PCE) inflation data, which is expected to show still-high price pressures. If the PCE data strengthens, expectations of a Fed rate hike could grow, causing the dollar to strengthen again against the euro.
Looking ahead, EUR/USD still has the potential to move defensively as long as it remains below 1.1370. If US PCE data is hotter than expected, the pair risks retesting the 1.1324 area and even moving lower. However, if US inflation begins to ease, the euro has the potential for a technical rebound, although the recovery will remain limited as long as German and eurozone economic data do not show more solid improvement. (Asd)
Source: Newsmaker.id
