EUR/USD Is Hampered in the Midrange Prior to Friday's Pivotal Data Release

On Thursday, EUR/USD fell to 1.0790 before a broad-based recovery pushed the dollar lower across the board. In line with market expectations, US Gross Domestic Product (GDP) growth slowed, and investors anticipating a rate cut are proceeding with caution ahead of Friday's key data releases.

A new release of the pan-European Harmonized Index of Consumer Prices (HICP) inflation rate is anticipated on Friday. It is anticipated that May's YoY Core EU HICP inflation will increase marginally from 2.7% to 2.8%, while headline HICP inflation will increase 2.5% from the previous 2.4%.

The American market session will commence with the release of the US Core Personal Consumption Expenditure (PCE) Price Index inflation, which is a crucial piece of information later on Friday. For the year ending in April, median market forecasts anticipate Core PCE Price Index inflation to remain unchanged at 2.8%, while month-over-month Core PCE Price Index inflation is anticipated to remain at 0.3%.

The first quarter GDP growth of the United States decelerated from 1.6% to 1.3%, which was in line with market expectations and sparked widespread expectations for a rate cut by the Federal Reserve (Fed). Rate traders are pricing in greater probabilities of a rate cut by the Federal Open Market Committee (FOMC) in September, as indicated by the FedWatch Tool of the CME. Rate markets currently estimate that the likelihood of the FOMC maintaining current rates in September is 49%, with over 50% probability indicating the likelihood of at least a quarter-point reduction.