EUR/USD: Euro maintains week's gains ahead of key US inflationary data

The single European currency moves towards the close of the week having managed to make good gains and is now well removed from the critical level of 1,06 which threatened to collapse last week.

The European currency retains on the table its ability to react when is under pressure and having developed a mild upward momentum is close to ends the week in positive territory.

The effort of the US dollar to return to the fore is weighed down by yesterday's preliminary announcement on the growth path of the US economy for the first quarter of 2024, which disappointed.

Today's agenda is of great interest as US personal consumption expenditures data are released, one of Fed's favorite indicators on inflationary pressures in the economy, and the likelihood of change in bets on rate cuts outlook is high.

Bets are currently concentrated on the possibility of a widening of the divergence between the key interest rates between the Fed and  ECB, which could potentially strengthen the US dollar further on medium term view and remains one of the key weights in the European currency's effort to return to higher prices and approach the level of 1,10 again.

Despite the euro moving away from the 1,06  and the consolidation mode which exchange rate is currently in by digesting those levels, the risk of the 1,06 level being tested again has not gone away.

Higher-than-expected Personal Consumption Expenditures data is expected to push US Treasury yields higher and act as a trigger for the US currency to return to the fore.