EUR/USD reclaims territory near 1.0880 after drop into 1.0820.
German Consumer Confidence declined to 11-month low.
US PCE inflation eased more than expected, but spending remained high.
EUR/USD recovered recent losses on Friday, recovering back into familiar technical levels. Still, overall gains remained limited after German Consumer Confidence backslid to almost a one-year low as economic conditions in Europe remain tepid at best.
US Personal Consumption Expenditure (PCE) Price Index inflation figures eased more than expected, but further gains in December’s Personal Spending alongside an unexpected uptick in Pending Home Sales trimmed rate cut expectations. With the US domestic economy continuing to bump along at a healthy clip, market hopes for early and deep rate cuts from the Federal Reserve continue to wilt.
EUR/USD slipped into multi-week lows early Friday after German Gfk Consumer Confidence in February declined to an 11-month low of -29.7 versus the forecasted improvement from -25.1 to -24.5.
The US Dollar broadly recovered after US YoY Core PCE Price Index figures in December eased to 2.9% from the forecast of 3.0%, previous 3.2%.
Despite the easing in inflation, US Personal Spending and Pending Home Sales both stepped higher.
Personal Spending rose 0.7% in December versus the 0.4% forecast, with the previous month’s print getting revised to 0.4% from 0.2%.
US Pending Home Sales climbed 8.3% in December compared to the expected rebound to 1.5% from the previous month’s 0.3% decline (revised down from 0.0%).
Next week brings European Gross Domestic Product (GDP) numbers on Tuesday, with the next high-impact rate call from the US Federal Reserve (Fed) slated for Wednesday.
Euro area Q4 GDP is expected to print at -0.1%, in line with the previous figure as the pan-European economy lags in stagnation.
Federal Reserve expected to hold rates steady in January, CME FedWatch Tool suggests markets pivoted to betting on the first rate cut in May after rate bets shifted post-PCE print
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