- EUR/USD holds positive ground above the mid-1.0900s amid the USD weakness.
- European Central Bank (ECB) officials emphasized the need to wait for more data before making decisions on rate normalization.
- The US Producer Price Index (PPI) unexpectedly dropped in December.
- Investors will focus on Eurozone Industrial Production, due later on Monday.
The EUR/USD pair posts modest gains during the early Asian session on Monday. The softer US Dollar (USD) and risk-on environment lend some support to the major pair. Due to the lack of top-tier US economic data from the US due to the Martin Luther King Jr. holiday, risk sentiment is anticipated to remain the primary driver of the major pair price movement. EUR/USD currently trades near 1.0953, up 0.03% on the day.
The European Central Bank (ECB) officials emphasized the need to wait for additional economic data before making decisions on rate normalization. On Saturday, ECB chief economist Philip Lane stated that the central bank will have important data by June to decide on a likely series of interest rate cuts, but moving prematurely may prove self-defeating. Last week, ECB President Christine Lagarde said that the 'hardest and worst bit' regarding inflation was likely past, and the interest rates would be cut if the ECB had confidence that inflation had fallen below 2%.
Across the pond, the US Producer Price Index (PPI) unexpectedly dropped in December, which triggered the potential that the Federal Reserve (Fed) will begin cutting interest rates this year. According to data released on Friday by the Bureau of Labor Statistics, the PPI rose 1.0% annually in December from November’s reading of 0.8%, while the core PPI was flat for the month, bringing the yearly increase down from 2.0% to 1.8%. With the signal of cooling inflation, investors anticipate additional monetary easing through 2024. The markets place a bet on 160 basis points (bps) of rate cuts from the Fed this year.
Traders will take more cues from ECB speakers this week, including Villeroy (Tuesday) and Nagel (Wednesday). Also, the ECB President Lagarde is set to speak on Wednesday, Thursday, and Friday. Apart from this, ECB Minutes will be released on Thursday.
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 turns negative near 1.0760
The sudden bout of strength in the Greenback sponsored the resurgence of the selling pressure in the risk complex, dragging EUR/USD to the area of daily lows near 1.0760.
GBP/USD comes under pressure and challenges 1.2500
GBP/USD now rapidly loses momentum and gives away initial gains, returning to the 1.2500 region on the back of the strong comeback of the US Dollar.
Gold retreats from highs on stronger Dollar, yields
XAU/USD trims part of its initial advance in response to the jump in the Dollar's buying interest and the re-emergence of the upside pressure in US yields.
XRP tests support at $0.50 as Ripple joins alliance to work on blockchain recovery
XRP trades around $0.5174 early on Friday, wiping out gains from earlier in the week, as Ripple announced it has joined an alliance to support digital asset recovery alongside Hedera and the Algorand Foundation.
Week ahead – US inflation numbers to shake Fed rate cut bets
Fed rate-cut speculators rest hopes on US inflation data. After dovish BoE, pound traders turn to UK job numbers. Will a strong labor market convince the RBA to hike? More Chinese data on tap amid signs of slow Q2 start.