EURUSD strengthened with the release of lower CPI and retail sales data.
The EURUSD trades near 1.0880 during Asian hours on Thursday, continuing its winning streak for the fourth session. The US Dollar’s (USD) drop is putting pressure on the EURUSD pair, which could be attributable to increased risk appetite.
On Wednesday, lower-than-expected monthly Consumer Price Index (CPI) and Retail Sales statistics in the United States (US) bolstered the likelihood of several rate reduction by the Federal Reserve (Fed) in 2024. The US CPI fell to 0.3% month on month in April, falling short of the predicted 0.4% reading. Retail Sales remained steady, falling short of the predicted 0.4% increase.
US dollar fell due to decreased US Treasury yields.
The US Dollar Index (DXY), which measures the performance of the US dollar (USD) versus six major currencies is hovering at 104.20. The US Treasury yields are falling. Which is weakening the greenback. The 2-year and 10-year yields on US Treasury bonds are 4.71% and 4.32, respectively, as of press time.
The Euro strengthens amid rising prospects of monetary policy convergence between the Eurozone and the United States.
On the Euro side, the Eurozone’s seasonally adjusted GDP (GDP) increased by 0.3% quarter on quarter in the first quarter, meeting expectations. Furthermore This expansion represents a rebound from the 0.1% decline experienced in each of the preceding two quarters. Also, the yearly The growth rate was 0.4%, as expected.
Moreover The Euro is supported by rising expectations of monetary policy convergence between the Eurozone and the United States. The European Central Bank (ECB) is expected to decrease interest rates at its upcoming meeting in June. While market expectations are building for the Fed to start cutting interest rates in September, particularly after core inflation declined in April for the first time in six months.
