EURUSD bulls are taking a breather after a recent strong rally to a nearly two-month high.
The EURUSD pair is seen oscillating in a narrow trading band during the Asian session on Friday, consolidating recent gains. To a nearly two-month high, around the 1.0925 region touched the day before.
The US Dollar (USD) remains depressed as the Federal Reserve’s (Fed) rate hike path remains uncertain. And this turns out to be a key factor acting as a tailwind for the major. The shared currency, on the other hand, is supported by slightly higher-than-expected German consumer inflation data released on Thursday. Which reaffirmed bets on additional European Central Bank interest rate hikes (ECB).
Traders are waiting for the Eurozone CPI and the US PCE Price Index.
It is worth noting that the Fed recently signaled that it may soon pause the rate-hiking cycle in response to the turmoil in Europe. The banking industry. Nonetheless, hopes that a widespread banking crisis had been avoided fueled speculation. That the US central bank would resume its inflation-fighting interest rate hikes.
Furthermore, three Fed officials backed the case for more rate hikes to combat high inflation on Thursday. In fact, Boston Fed President Susan Collins stated that another 25 basis point increase. In March was appropriate and that there is still work to be done to bring inflation down to the 2% target.
Separately, Minneapolis Fed President Neel Kashkari stated that the central bank still has work to do to return inflation to its 2% target. Furthermore, Richmond Fed President Thomas Barkin stated in a speech, “If you Back off on inflation too soon. And inflation returns stronger, requiring the Fed to do even more damage.” Meanwhile, policymakers added a note of caution about the uncertainty of the future. With two admitting that banking sector issues could generate enough headwinds on the economy to help cool price pressures faster than expected. This, combined with slightly higher-than-expected US jobless claims and the pervasive risk-on environment. Continues to weigh on the safe-haven buck.
According to the US Department of Labor (DOL), the number of Americans filing for unemployment insurance for the first time increased to 198K during the week ended March 25 from 191K the previous week.
Meanwhile, preliminary estimates for Germany show a 0.8% increase in consumer prices. in March, with a 7.4% year-on-year increase. This raises the prospect of a positive surprise in the Eurozone CPI. Which is due this Friday. Investors will also look to the US Core PCE Price Index. The Fed’s preferred inflation gauge, which is due later in the early North American session. Aside from that, ECB President Christine Lagarde’s scheduled speech on the last day of the week should provide some meaningful impetus to the EURUSD pair.
