- EUR/USD edges lower to 1.0885 amid the recovery of USD.
- FOMC is expected to hold its key fed funds rate steady at a 5.25%–5.50% range on Wednesday.
- ECB’s de Cos said that the central bank could start cutting interest rates in June after a decrease in Eurozone inflation.
- The FOMC monetary policy meeting and press conference on Wednesday will be in the spotlight.
The EUR/USD pair trades softer below the 1.0900 mark during the early Asian session on Monday. The rebound of the US Dollar (USD) above 103.50 weighs on the major pair. Investors await the US Federal Open Market Committee's (FOMC) interest rate decision on Wednesday, with no change in rate expected. At press time, EUR/USD is trading at 1.0885, down 0.03% on the day.
The University of Michigan showed on Friday that the Consumer Sentiment Index dropped to 76.5 in March compared to the previous reading and the estimation of 76.9. The UoM one-year and five-year inflation expectations were unchanged at 3.0% and 2.9%, respectively. Meanwhile, US Industrial Production climbed to 0.1% MoM in February from a 0.5% MoM drop in January.
The FOMC is widely expected to hold its key fed funds rate steady at a 22-year high of a 5.25%–5.50% range on Wednesday as Fed officials want to see more evidence of inflation data to ensure it returns to its 2% target before starting to cut the interest rates. That being said, the high-for-longer US rate narrative might lift the US Dollar (USD) and act as a headwind for the EUR/USD pair.
On the Euro front, the European Central Bank (ECB) kept borrowing costs at record highs at its March meeting, but policymakers indicated they were discussing a first rate cut. The ECB policymaker Pablo Hernandez de Cos said on Sunday that the central bank left borrowing costs at a record high this month but said it had made good progress in bringing down inflation and has started a preliminary discussion about monetary easing. He added that the central bank could start cutting interest rates in June after a decrease in Eurozone inflation.
The Eurozone Harmonized Index of Consumer Prices (HICP) and Trade Balance are due on Monday. On Tuesday, the ZEW Survey from Germany and the Eurozone will be released. The attention will shift to the FOMC interest rate decision on Wednesday. Traders will take cues from the data and find trading opportunities around the EUR/USD pair.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD stays in positive territory above 1.0850 after US data
EUR/USD clings to modest daily gains above 1.0850 in the second half of the day on Friday. The improving risk mood makes it difficult for the US Dollar to hold its ground after PCE inflation data, helping the pair edge higher ahead of the weekend.
GBP/USD stabilizes above 1.2850 as risk mood improves
GBP/USD maintains recovery momentum and fluctuates above 1.2850 in the American session on Friday. The positive shift seen in risk mood doesn't allow the US Dollar to preserve its strength and supports the pair.
Gold rebounds above $2,380 as US yields stretch lower
Following a quiet European session, Gold gathers bullish momentum and trades decisively higher on the day above $2,380. The benchmark 10-year US Treasury bond yield loses more than 1% on the day after US PCE inflation data, fuelling XAU/USD's upside.
Avalanche price sets for a rally following retest of key support level
Avalanche (AVAX) price bounced off the $26.34 support level to trade at $27.95 as of Friday. Growing on-chain development activity indicates a potential bullish move in the coming days.
The election, Trump's Dollar policy, and the future of the Yen
After an assassination attempt on former President Donald Trump and drop out of President Biden, Kamala Harris has been endorsed as the Democratic candidate to compete against Trump in the upcoming November US presidential election.