💲 USD mixed ahead of PCE data

The US dollar managed to recover a bulk of morning losses and is no longer the worst performing G10 currency. Greenback is now neither leader nor loser among major currencies. Release of the US data pack for May is the most important event in the afternoon today. Report is expected to show a significant slowdown in headline PCE in May while core PCE is seen staying unchanged at 4.7% YoY. Personal income and spending data is expected to show increases but their pace is seen moderating compared to April's data.

US data pack for May

• Personal income. Expected: +0.3% MoM. Previous: +0.4% MoM
• Personal spending. Expected: +0.2% MoM. Previous: +0.8% MoM
• Headline PCE. Expected: 3.8% YoY. Previous: 4.4% YoY
• Core PCE. Expected: 4.7% YoY. Previous: 4.7% YoY

PCE data will be watched closely but may not have much of an impact on the markets unless it shows a major deviation from expectations. Traders should keep in mind that Powell hit a hawkish note during his speeches at ECB forum in Sintra, Portugal and markets now see a July rate hike almost as certain with money market pricing showing almost 90% of a hike at the July 26, 2023 meeting. However, an unexpected pick-up in headline would likely see at least a short-term hawkish reaction with USD gaining and indices moving lower.

Taking a look at EURUSD chart at D1 interval, we can see that the main currency pair may have painted the right shoulder of the head and shoulders pattern. Pair is attempting to break below the 50-session moving average (green line). This hurdle halted declines last week but if bears manage to push the pair below it, the way towards the neckline of head and shoulders pattern will be open

Source: xStation5