EUR/USD stays silent around 1.0450 ahead of Eurozone GDP data

EUR/USD moves little as traders adopt caution ahead of Eurozone GDP and US Retail Sales data due on Friday.
Eurozone GDP may remain consistent at 0.9% growth YoY in Q4, as expected.
US Retail Sales are forecasted to contract by 0.1% MoM in January, following a previous increase of 0.4%.

Akhtar Faruqui FXStreet

EUR/USD holds steady around 1.0460 during Asian trading hours on Friday, following three consecutive sessions of gains. The pair strengthened after US President Donald Trump delayed the implementation of reciprocal tariffs. Meanwhile, the US Dollar (USD) weakens amid declining US Treasury yields, despite ongoing concerns over a global trade war.

Investors now turn their focus to the upcoming US Retail Sales report, the final key economic release of the week. Markets expect a slight monthly contraction of 0.1% in January, following a 0.4% increase in the previous period.

The US Dollar Index (DXY), which tracks the USD against six major currencies, extends its losses for a fourth straight session, trading around 107.00. At the time of writing, US Treasury bond yields stand at 4.31% for the 2-year note and 4.53% for the 10-year note.

In the US, Core PPI inflation rose to 3.6% YoY in January, surpassing the expected 3.3% but slightly below the revised 3.7% (previously reported as 3.5%). This has reinforced expectations that the Federal Reserve (Fed) will postpone rate cuts until the second half of the year. Persistently high inflation may also support the Fed’s stance of maintaining interest rates at 4.25%-4.50% for an extended period.

The Euro could face potential headwinds as European Central Bank (ECB) policymaker Boris Vujčić indicated on Thursday that markets are pricing in three rate cuts this year, a forecast he described as reasonable, according to Reuters. Vujčić also suggested that the ECB could remove its reference to a "restrictive policy" in the March statement, citing expectations of a swift decline in services inflation in the coming months.

Economic Indicator

Gross Domestic Product s.a. (YoY)

The Gross Domestic Product (GDP), released by the Eurostat on a quarterly basis, is a measure of the total value of all goods and services produced in the Eurozone during a certain period of time. The GDP and its main aggregates are among the most significant indicators of the state of any economy. The YoY reading compares economic activity in the reference quarter compared with the same quarter a year earlier. Generally speaking, a rise in this indicator is bullish for the Euro (EUR), while a low reading is seen as bearish.

EUR/USD appears supported by the 200-day SMA, for now

Following an early pullback to multi-week lows near 1.1670, EUR/USD now manages to reclaim the 1.1700 region as the NA session draws to a close on Monday. The steep retracement in spot follows the equally strong move higher in the US Dollar, as investors continue to assess the geopolitical landscape in the wake of the US and Israel attacks on Iran.

GBP/USD hits new yearly lows near 1.3300

GBP/USD adds to the recent bearish tone, approaching to the key 1.3300 support to reach fresh YTD troughs against the backdrop of the robust performance of the US Dollar. Indeed, Cable’s decline comes amid the firm demand for the safe-haven space in the wake of the US and Israel attacks to Iran.

Gold clings to gains as US-Iran conflict continues to underpin safe-haven assets

Gold retains positive bias for the fifth consecutive day on Tuesday as rising geopolitical tensions in the Middle East continue to underpin safe-haven assets. However, a bullish US Dollar could keep the bullion below its highest level since late January, set on Monday, warranting caution before positioning for any further appreciation.