EUR/USD lingers around 1.0950, striving to uphold its recent advances

EUR/USD remains steady near 1.0950 during Thursday's Asian session, in an attempt to maintain gains from the prior session. The EUR/USD pair received a boost as the US Dollar (USD) struggled to sustain its strength despite higher US Treasury yields spurred by positive inflation data. Market participants are eagerly anticipating the release of the US Core Producer Price Index (PPI) and Retail Sales data later today.

However, market participants are maintaining their bets on interest rate cuts by the US Federal Reserve (Fed) in June, with a probability of 67.2%, as reported by the CME FedWatch Tool. US Treasury Secretary Janet Louise 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's budget plan were considered "reasonable" and consistent with a wide range of forecasts.

On the other side, anticipation mounts for the European Central Bank (ECB) to lower borrowing costs come June, a move that could potentially weaken the Euro. ECB policymaker Francois Villeroy de Galhau indicated on Wednesday that a rate cut in the spring remains likely, emphasizing their vigilance on inflation while expressing confidence in nearing victory over current economic challenges.

Adding to the discourse, ECB member Martins Kazaks suggested that if the euro-area economy aligns closely with the ECB’s projections, the decision to commence interest rate reductions could be reached in the upcoming meetings. Furthermore, ECB Board Members Frank Elderson and Isabel Schnabel are scheduled to deliver speeches at the Money Market Contact Group meeting in Frankfurt, Germany.