The Euro/Dollar exchange rate rose to the resistance level of 1.2230.
Preliminary German inflation figures for May recorded a 0.5% increase in consumer prices compared to last month and a 2.5% increase in annual terms. The data came out better than the forecasts. Last week, the euro / dollar pair hit a new four-month high around 1.2270 before falling back into the current area. Quotes are still supported by risk appetite and, as a result, weak demand for Dollar. The US economy is gaining momentum – core personal consumption expenditures grew by 3.1% per year. The Fed prefers this indicator of inflation to others, and growth far above the Central Bank's target could raise concerns that price increases are long-term.
On Friday, President Joe Biden proposed a $ 6 trillion budget that would allow the United States to achieve the highest sustained level of federal spending since World War II. At the same time, the budget deficit will exceed $ 1.3 trillion over the next decade, even if the economy recovers from the recession and grows at a high rate. The total debt of the population will exceed the annual value of total production and grow to 117% of the current size of the economy in 2031. Biden's forecasts continue to show that his administration has little fear of a rapid rise in inflation in the economy, despite recent data indicating a strong jump in prices. According to the administration's forecasts, consumer prices will not grow faster than 2.3% per year, and the Fed will only gradually raise interest rates from their current minimum levels in the coming years.
EUR/USD Euro Dollar Forex forecast for June 1, 2021
The forecast expects further growth of the euro/dollar exchange rate to the levels of 1.2250, 1.2270 and 1.2300.