EUR/USD rises to near 1.1350 ahead of Eurozone HICP inflation data

EUR/USD is supported by an improvement in global risk sentiment.
The Euro could face headwinds as markets anticipate a 25 basis point rate cut by the ECB on Thursday.
CME FedWatch tool indicates that markets are pricing in around 85 basis points of Fed rate cuts by the year-end.

Akhtar Faruqui FXStreet

EUR/USD is trading around 1.1340 during the Asian hours on Wednesday, rebounding after two consecutive sessions of losses. The pair is drawing support from a more positive global risk sentiment, buoyed by US President Donald Trump's decision to exempt key technology products from his newly announced “reciprocal” tariffs.

However, further upside for the Euro (EUR) may be limited as markets widely expect the European Central Bank (ECB) to cut interest rates by 25 basis points on Thursday. This move comes amid escalating recession fears linked to US trade policy. The ECB has already lowered rates twice this year, with the Deposit Facility Rate currently at 2.5%. A cut this week would bring it down to 2.25%.

Investors will be closely watching ECB President Christine Lagarde’s press conference for signals on the central bank’s policy direction for the remainder of the year, as well as the potential economic impact of the US tariff measures on the Eurozone.

Meanwhile, the CME FedWatch tool shows that markets are pricing in approximately 85 basis points of Fed rate cuts by year-end, with expectations that the Fed will hold rates steady in the upcoming meeting. Later in the day, attention will turn to US Retail Sales data for March, which may provide further insight into how tariff uncertainties are affecting consumer spending.

Economic Indicator

Core Harmonized Index of Consumer Prices (YoY)

The Core Harmonized Index of Consumer Prices (HICP) measures changes in the prices of a representative basket of goods and services in the European Monetary Union. The HICP, – released by Eurostat on a monthly basis, is harmonized because the same methodology is used across all member states and their contribution is weighted. The YoY reading compares prices in the reference month to a year earlier. Core HICP excludes volatile components like food, energy, alcohol, and tobacco. The Core HICP is a key indicator to measure inflation and changes in purchasing trends. Generally, a high reading is seen as bullish for the Euro (EUR), while a low reading is seen as bearish.

EUR/USD deflates to fresh lows, targets 1.1600

The selling pressure on EUR/USD now gathers extra pace, prompting the pair to hit fresh multi-week lows in the 1.1625-1.1620 band on Friday. The continuation of the downward bias comes in response to further gains in the US Dollar as market participants continue to assess the mixed release of US Nonfarm Payrolls in December.

GBP/USD breaks below 1.3400, challenges the 200-day SMA

GBP/USD remains under heavy fire and retreats for the fourth consecutive day on Friday. Indeed, Cable suffers the strong performance of the Greenback, intensified post-mixed NFP, and trades at shouting distance from its critical 200-day SMA near 1.3380.

Gold flirts with yearly tops around $4,500

Gold keeps its positive bias on Friday, adding to Thursday’s advance and challenging yearly highs in the $4,500 region per troy ounce. The risk-off sentiment favours the yellow metal despite the firmer tone in the Greenback and rising US Treasury yields.