- EUR/USD is expected to witness more downside as the appeal for the US Dollar strengthens.
- Fed Daly said there is absolutely no urgency for the Fed to pivot to rate cuts.
- The ECB is expected to begin reducing interest rates from the June meeting.
The EUR/USD pair sees more downside below the immediate support of 1.0620 in Monday’s early American session. The major currency pair weakens as robust spending by United States households at retail stores in March has improved the US Dollar’s appeal.
The US Census Bureau reported that monthly Retail Sales grew strongly by 0.7% from expectations of 0.3%. In February, Retail Sales data rose by 0.9%, upwardly revised from 0.6%. The Retail Sales data is one of leading indicators of consumer spendings, which accounts for more than two-thirds of the US economy. Higher spending by households indicates a stubborn inflation outlook.
Upbeat Retail Sales data would allow Federal Reserve (Fed) policymakers to keep the monetary policy stance restrictive for a longer period.
Fed policymakers have been reiterating the need for maintaining interest rates higher until they get convinced that inflation will return to the desired rate of 2%. San Francisco Fed Bank President Mary Daly said on Friday that there is absolutely no urgency to start reducing interest rates. Daly added that there is still more work to do to make sure that inflation is on course to return to the desired rate of 2%.
In Monday’s early New York session, New York President John Williams said he is more optimistic about potential growth but see rate cuts starting later this year.
On the Eurozone front, European Central Bank (ECB) policymaker Peter Kazimir see possibility of rate cuts starting from the June meeting if inflation continues to fall. For the longer-term outlook, Kazmir said the ECB is not committed to any policy path beyond June, noting that they must maintain flexibility.
Last week, the ECB kept its Main Refinancing Operations Rate unchanged at 4.5% as expected. In a monetary policy conference, ECB President Christine Lagarde said if a fresh assessment increase policymakers' confidence that inflation is heading back to target, then it "would be appropriate" to cut interest rates, Reuters reported.
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
AUD/USD holds steadily as traders anticipate Australian Retail Sales, Fed’s decision
The Aussie Dollar registered solid gains against the US Dollar on Monday, edged up by 0.55% on an improvement in risk appetite, while the Greenback was crushed by Japanese authorities' intervention. As Tuesday’s Asian session begins, the AUD/USD trades at 0.6564.
EUR/USD finds support near 1.0720 after slow grind on Monday
EUR/USD jostled on Monday, settling near 1.0720 after churning in a tight but lopsided range as markets settled in for the wait US Fed outing. Investors broadly expect US rates to hold steady this week, but traders will look for an uptick in Fed guidance for when rate cuts could be coming.
Gold prices soften as traders gear up for Fed monetary policy decision
Gold price snaps two days of gains, yet it remains within familiar levels, with traders bracing for the US Fed's monetary policy decision on May 1. The XAU/USD retreats below the daily open and trades at $2,334, down 0.11%, courtesy of an improvement in risk appetite.
Will Bitcoin ignore major macro market developments this week?
Bitcoin price will be an interesting watch this week, with increased volatility expected amid crucial events lined up in the macro market. On Tuesday, Hong Kong will be debuting its BTC and ETH ETFs while the next day will see FOMC minutes make headlines.
Gearing up for a busy week: It typically doesn’t get any bigger than this
Attention this week is fixated on the Federal Reserve's policy announcement scheduled for Wednesday. While the US central bank is widely expected to remain on hold, traders will be eager to discern any signals from the Fed regarding the possibility of future interest-rate cuts.