EURUSD advances further, reaching new YTD highs of 1.1075.
A little farther selling pressure in the greenback drives EURUSD to new 2023 highs near 1.1080 by the end of the week. In a context of persistent weakness hurting the dollar. EURUSD advances for the fourth session in a row and consolidates. Further the recent breakout of the psychological 1.1000 hurdle on Friday.
The pair’s weekly gains have been supported by investors’ growing belief that the Fed will end its hiking cycle in the near term. Most likely after the May meeting, when it is still expected to raise the Fed Funds Target Range (FFTR) by another 25 basis points.
Many ECB rate setters have also advocated for the continuation of the tightening process in the pair. Adding to the pair’s solid momentum. the region, putting a potential 50 basis point rate hike next month back on the table.
In terms of regional data, final inflation figures in France showed the CPI rose 0.9% MoM in March and 5.7% year on year.
It will be an interesting calendar across the pond, with Retail Sales. Industrial Production, advanced Michigan Consumer Sentiment. And Business Inventories all due. C. Waller (permanent voter, centrist) of the FOMC is also scheduled to speak.
The greenback is still available and is navigating new 2023 lows.
The EURUSD pair reaches new highs well above 1.1000, owing to the strong decline. In the US dollar and expectations of further ECB tightening. Meanwhile, price action around the single currency should continue to closely track dollar dynamics. As well as the emerging Fed-ECB divergence regarding the banks’ intentions regarding potential future interest rate moves. Moving forward, hawkish ECB-speak continues to favors further rate hikes. Despite some loss of momentum in the region’s economic fundamentals.
Important issues concerning the back boiler: The ECB hiking cycle will be continued or not. The impact of the Russia-Ukraine conflict on the region’s growth prospects and inflation outlook. Inflationary risks are becoming entrenched.
