Ella 
During the European session on Friday, the EUR/USD exchange rate was trading in a narrow range above the 1.0800 integer support level. The preliminary Eurozone Harmonized Consumer Price Index (HICP) for May and the US Core Personal Consumption Expenditures (PCE) data for April will be released at 17:00 and 20:30 Beijing time, respectively. Before that, the exchange rate trend is full of uncertainty.
The overall harmonized inflation rate in the eurozone is expected to increase from 2.4% in April to 2.5% year-on-year. During the same period, the core HICP data (excluding unstable factors such as food, energy, tobacco and alcohol) is expected to accelerate from 2.7% to 2.8% previously.
The Eurozone inflation data for May is unlikely to affect market speculation that the European Central Bank (ECB) will cut interest rates at its June meeting, as the rate cut seems to be a foregone conclusion. ECB policymakers remain calm about speculation of a rate cut in June as price pressures continue to ease and deflation in the service sector has re-emerged.
However, inflation data will provide clues on how the ECB will follow its rate-cutting path after June. If price pressures fall further, it will fuel expectations of subsequent rate cuts, while if the data is stubborn, it could force officials to take a more gradual approach. Meanwhile, most ECB policymakers have been stressing the need to remain data-dependent and have been reluctant to offer any predetermined rate trajectory.
