![](\"https:\/\/www.financialmirror.com\/wp-content\/uploads\/2023\/07\/ECB-european-central-bank-oanda-craig.jpg\")
<\/p>\n<\/p>\n
The EURUSD exchange continued trading in the mid 1.0900s after pulling back from a peak at 1.0981 achieved last week. With data releases and events affecting both sides of the Euro-dollar pair on Thursday, a cursory glance at the proverbial \u201ccrystal ball\u201d suggests some volatility is probable.<\/p>\n
In the US, factory gate inflation and Retail Sales data could tone expectations of when the Federal Reserve will start cutting interest rates \u2013 a key driver for the US Dollar.<\/p>\n
Economists expect Core PPI, an important inflation metric, to drop to 1.9% YoY in February from 2.0% in January.\u00a0On a month-on-month basis, Core PPI is forecast to show a 0.2% rise, against the 0.5% advance seen in the previous month.<\/p>\n
The headline Producer Price Index (PPI) is forecast to show a 1.1% YoY gain, versus 0.9% in January, and a 0.3% gain MoM, the same as previous.<\/p>\n
The data is an important leading indicator for CPI inflation. If retailers have to pay more for their goods wholesale, they will usually pass on the increase to consumers.<\/p>\n
Market participants maintain their bets on interest rate cuts by the Fed in June, with a probability of 67.2%, as reported by the CME FedWatch Tool.<\/p>\n
US Treasury Secretary Janet Yellen commented that it seems improbable for interest rates to return to pre-COVID-19 levels. She also mentioned that the interest rate projections outlined in President Biden\u2019s budget plan were considered \u201creasonable\u201d and consistent with a wide range of forecasts.<\/p>\n
In Europe, a string of rate-setters from the European Central Bank are scheduled to speak, with their comments likely to shed light on whether interest rates will fall in April or June \u2013 a key driver for the Euro.<\/p>\n
The takeaway is that if inflation is seen as stubborn, interest rates will stay high, supporting the European currency.<\/p>\n
Dovish talk from ECB Governing Council big-hitter Francois Villeroy de Galhau on Monday suggested he was leaning in favour of April for a first interest-rate cut.<\/p>\n
On Wednesday, Bank of Austria Governor and ECB Governing Council member Robert Holzmann, however, said he thought the bank was more likely to cut in June. The President of the ECB, Christine Lagarde, also said June was the time the ECB would review its policy on rates.<\/p>\n
If more members appear to gravitate to June, which is the base case, it could have a slightly positive impact on the Euro and EURUSD. If the De Galhau camp gains momentum, EURUSD could weaken, according to analysts.<\/p>\n
After Tuesday\u2019s US inflation figures, economists at Commerzbank said we should be done with most of the first-tier data in EURUSD ahead of next Wednesday\u2019s Fed meeting.<\/p>\n
\u201cWe should be in for a somewhat calmer few days, at least in the EUR\/USD pair.<\/p>\n
\u201cAfter the US data, it will be time to enjoy the calm before the storm and wait for the Federal Reserve. Next week\u2019s Wednesday will be exciting enough for sure.\u201d<\/p>\n
(Source: OANDA)<\/p>\n","protected":false},"excerpt":{"rendered":"
The EURUSD exchange rate was trading in the mid 1.0900s after reaching a peak at 1.0981 the previous week. Upcoming data releases and events are expected to introduce some volatility to the Euro-dollar pair. In the US, upcoming factory gate inflation and Retail Sales data could influence expectations regarding the Federal Reserve’s timeline for interest rate cuts, which is a significant factor for the US Dollar. Economists anticipate a decrease in Core PPI to 1.9% year-over-year in February from 2.0% in January, with a month-on-month forecast showing a 0.2% increase compared to the 0.5% increase the previous month. The headline Producer Price Index (PPI) is expected to show a 1.1% year-over-year gain, up from 0.9% in January, and a 0.3% month-on-month gain, consistent with the previous month. This data is a crucial indicator for CPI inflation, as increases in wholesale costs are typically passed on to consumers. Market participants are betting on a 67.2% probability of the Fed cutting interest rates in June, according to the CME FedWatch Tool. US Treasury Secretary Janet Yellen stated that it seems unlikely for interest rates to return to pre-COVID-19 levels and deemed the interest rate projections in President Biden\u2019s budget plan as \u201creasonable.\u201d In Europe, several ECB officials are set to speak, potentially providing insights into whether interest rates will be cut in April or June. If inflation remains high, interest rates are likely to stay elevated, supporting the Euro. ECB Governing Council member Francois Villeroy de Galhau indicated a preference for an April rate cut, while Bank of Austria Governor Robert Holzmann and ECB President Christine Lagarde suggested a June timeline for revisiting rate policies. The timing of ECB rate cuts could impact the Euro and EURUSD exchange rate. After recent US inflation data, a calmer period is expected in the EURUSD pair ahead of the next week’s Federal Reserve meeting.<\/p>\n","protected":false},"author":4,"featured_media":4166,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"Default","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[4],"tags":[1902,492,1766,598,1922,432,260,50,534,1255,599,1923,201,51,600,1924,52,1823,67,899,374,1125,1401,54,34,1346,55,375,973,380,601,1124,651,1925,18],"class_list":["post-4165","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-cyprus","tag-bank","tag-biden","tag-budget","tag-christine-lagarde","tag-core-inflation","tag-covid","tag-dollar","tag-ecb","tag-ecb-rate-cut","tag-eur-usd-pair","tag-euro","tag-euro-dollar","tag-europe","tag-european-central-bank","tag-eurusd","tag-eurusd-exchange","tag-federal-reserve","tag-increase","tag-inflation","tag-interest","tag-interest-rate","tag-interest-rate-cuts","tag-interest-rates","tag-marketpulse","tag-markets","tag-meeting","tag-oanda","tag-rate-cut","tag-treasury","tag-us","tag-us-data","tag-us-dollar","tag-us-inflation","tag-volatility","tag-world"],"acf":{"keyphrase":"","keywords":"","sourceimg":"","country-category":""},"yoast_head":"\n