EUR/USD holds above 1.0800 ahead of Eurozone GDP, according to US CPI data

The EUR/USD pair trades with a bullish bias around 1.0815 during the early Asian trading hours on Wednesday. Markets might turn to a cautious mood later in the day ahead of key economic data from the Eurozone and the US. The first reading of the Eurozone Gross Domestic Product (GDP) for the first quarter and the US April Consumer Price Index (CPI) will be the highlights on Wednesday. 

On Tuesday, Federal Reserve (Fed) Chairman Jerome Powell said that inflation is falling slower than expected, and the PPI data provided more justification to keep rates higher for longer. Powell added that it’s unlikely in his view that the central bank would have to raise further interest rates, even if the chances for rate cuts have become less. Additionally, Kansas City Fed President Jeffrey Schmid noted that inflation remains too high and the US central bank has more work to do. These hawkish comments might lift the US Dollar (USD) and weigh on the major pair in the near term. 

However, the US CPI data is due later in the day, and it might influence the Fed interest rate decision in the next meeting. The annual headline CPI inflation is expected to ease to 3.4% in April from 3.5% in the previous reading. The Core CPI inflation is projected to drop to 3.6% in April from 3.8% prior. If the forthcoming CPI data meets expectations, it could trigger the prospect of rate cuts. This, in turn, might drag the Greenback lower and act as a tailwind for EUR/USD. 

Across the pond, the upbeat ZEW Economic Sentiment Survey has provided some support to the major pair for the time being. The Eurozone ZEW Economic Sentiment Survey improved to 47.0 in May from 43.9 in the previous month, above the estimation of 46.1. The attention will shift to the European GDP growth numbers, which are estimated to grow by 0.3% QoQ in Q1, while the Annualized GDP growth is forecast to hold steady at 0.4% YoY.