Euro resilient awaiting key numbers

Published on 09.04.2024 10:52

The Euro is holding up well against the US dollar as we get ready to enter the European trading session on Tuesday. Some key drivers for the EUR/USD currency pair today will be the US NFIB Business Optimism Index and the RCM/TIPP Economic Optimism Index along with the speech by Minneapolis Fed N. Kashkari. 
The upbeat US labour market data and the strength of the US economy has raised uncertainties about rate cuts from the Federal Reserve (Fed) this year. Minneapolis Fed President Neel Kashkari said last week that he penciled in two interest rate cuts this year but if inflation continues to stall, no rate cuts would be a possible scenario. Financial markets have priced in the 50% odds of rate cuts under 50% for both June and July, lower than at the beginning of April, according to the CME’s FedWatch tool. 
The attention this week will shift to the US March Consumer Price Index (CPI) data on Wednesday after February’s annual inflation rate of 3.2% came in higher than expected. The stronger-than-expected figure in March data could dampen expectations for rate cuts in June, while softer inflation figures could fuel speculation for rate reductions. 

  Across the pond, the European Central Bank’s (ECB) interest rate decision will be in the spotlight on Thursday. The ECB is widely expected to keep interest rates unchanged at its April policy meeting. Data released last week indicated that inflation fell unexpectedly in March, raising the expectation for ECB rate cuts. Investors will also be looking for any clues about the pace of the easing cycle once it begins. Markets believe there is a greater than 90% chance of an ECB cut in June which has already been pretty much factored into the price of the Euro.