The EUR/USD pair is currently trading around 1.0740, facing pressure from a stronger USD. This comes after an unexpected rise in US CPI inflation data in March, which pushed the US Dollar to yearly highs and weighed on the major pair. Investors are closely monitoring the European Central Bank (ECB) interest rate decision and the upcoming US Producer Price Index (PPI) report.
The ECB is widely expected to maintain interest rates at a record high in its April meeting, but ECB President Christine Lagarde is likely to discuss inflation data and the possibility of a rate cut in June. This decision is in contrast to the Federal Reserve (Fed), which may delay its easing cycle due to a strong economy and surprising inflation figures. The divergence in interest rates between the Fed and ECB could lead to selling pressure on the Euro and create headwinds for the EUR/USD pair.
US Inflation Data Impact
The unexpected rise in US inflation data in March led to speculation that the US central bank would postpone an interest rate cut. As a result, the Greenback surged to yearly highs above 1.0530. The US Consumer Price Index (CPI) rose 0.4% MoM in March, exceeding the expected 0.3% gain. On an annual basis, the CPI increased by 3.5% YoY, surpassing the anticipated 3.4% rise. The Core CPI, which excludes volatile food and energy prices, also recorded higher-than-expected numbers, with a 0.4% MoM increase and a 3.8% YoY growth.
Later in the day, the US Producer Price Index for March and weekly Initial Jobless Claims data will be released. Additionally, Fed officials Williams, Collins, and Bostic are scheduled to speak, which could provide further insights into the central bank’s stance on monetary policy. Overall, the US economic data releases are likely to continue impacting the EUR/USD pair in the coming days, with investors closely monitoring any further developments.