Euro stalls on US rate hike bets

The Euro continues to suffer in todays trading session against the US dollar, following on from last Friday’s losses after heightened expectations that the US Federal Reserve is set to continue their rate hiking program next month.

The release of retail sales figures, and especially the closely watched Core retail sales numbers, which correspond most closely with the consumer spending component of gross domestic product, fell 0.3% last month. However, despite last month’s fall, the gains racked up in January and February that consumer spending will come out on top in the first quarter.

"It was generally on the weak side with the exception of the retail sales control group, which is super core retail sales, it was just a little less negative than expected and makes you think that maybe the market was looking for something much weaker," said Mazen Issa, senior foreign exchange strategist at TD Securities in New York.

The greenback was also further boosted against the Euro after comments from a Fed board member who noted that markets were jumping to conclusions about the US central Bank rate hiking program coming to an end and more work still needed to be done to bring inflation under control.

"Monetary policy will need to remain tight for a substantial period and longer than markets anticipate,” Federal Reserve Governor Christopher Waller noted on Friday.

Looking further ahead today, the main driver of the EUR/USD currency pair will be a monetary speech by ECB president Christine Lagarde where the question of further rate hikes by the European central bank will be squarely on the table.

ECB Governing Council member Martins Kazaks noted earlier today that a smaller rate hike of 25 basis points in May is possible, although a 50-basis point increase should not be dismissed entirely.