EURUSD remains steady near 1.0900 as a result of various Tailwinds.
EURUSD is Marginally lower but still holding gains near 1.0900 in Monday’s New York session. The key currency pair stays Optimistic due to Investors’ Increased risk Appetite. The Euro has done well in recent trading sessions. As Market Investors become more apprehensive about whether the European Central Bank (ECB) will continue to Tighten policy after the June meeting.
The ECB’s Schnabel is unsure if the central bank would maintain interest rate Reduction beyond June.
The ECB is largely expected to begin Lowering interest rates following the June meeting. However, ECB Policymakers remain divided on the rate cut. Move during the July meeting. Some Policymakers are concerned. That an aggressive rate-cutting cycle will reignite pricing pressures and reverse the impact on inflation that has already occurred.
Last week, ECB board member Isabel Schnabel stated. That, depending on incoming data, a rate drop in June may be acceptable. But the road after June is far more uncertain. Schnabel stated that she is unable to commit to any certain rate path due to the significant level of uncertainty.
On the economic front, investors will focus on the Eurozone and the United States’ preliminary Purchasing Managers Index (PMI) data for May. Which will be released on Thursday. The PMI figures will show their economic outlook.
EURUSD remained stable ahead of preliminary Eurozone/US PMI data. Trades in a narrow range below the round-level resistance at 1.0900. The shared currency pair is expected to remain quiet. As investors focus on the Federal Open Market Committee’s (FOMC) minutes for the May meeting. Which will be released on Wednesday. The FOMC minutes will provide a detailed explanation of why interest rates have remained stable, as well as policymakers’ opinions on the interest rate forecast.
Fed policymakers emphasize the need of keeping interest rates high for an extended period of time.
Fed policymakers’ communication on the interest rate outlook is expected to remain hawkish as inflationary pressures accelerated in the first three months of the year. However, the Consumer Price Index (CPI) statistics for April fell as expected, owing to lower prices for utilities gas piped services, secondhand cars, and trucks. Fed policymakers are likely to have avoided supporting For additional policy tightening.
Though the drop in price pressures has brought some relief that the disinflationary process has not paused, Fed officials remain leaning toward a more restrictive monetary stance for the foreseeable future in order to create confidence that inflation will sustainably revert to the goal rate of 2%.
Last Monday, New York Fed President John Williams stated that monetary policy is restrictive but in a good place. He sees no economic indicators that indicate a need to modify the monetary policy stance right now. When asked about the inflation outlook, Williams stated, “In the very near term, I don’t expect to get that greater confidence that we need to see on inflation progress towards a 2% goal,” according to Reuters.
