09 May 2024, EUR/USD
EURUSD:
The EUR/USD may extend losses for the third consecutive session, trading near 1.0750 during the Asian session on Thursday. The US dollar (USD) is appreciating amid expectations that the Federal Reserve (Fed) will maintain higher interest rates. In addition, rising US Treasury bond yields support the USD, which negatively affects the EUR/USD pair.
Furthermore, comments from US Federal Reserve officials have contributed to the strengthening of the US dollar. According to a Reuters report, Federal Reserve Bank of Boston President Susan Collins said on Wednesday that a period of moderation in the US economy is needed to achieve the central bank's 2% inflation target. On Tuesday, Minneapolis FRB President Neel Kashkari said expectations prevail that rates will remain unchanged for a significant period of time. While the likelihood of a rate hike is minimal, it cannot be completely discounted.
In the eurozone, monthly retail sales increased by 0.8% in March, following an upwardly revised 0.3% decline in February. This represents the strongest increase in retail activity since September 2022, indicating the continued strength of the European consumer sector. Furthermore, retail sales (year-on-year) increased by 0.7% from a revised decline of 0.5% in February. This marks the first increase in retail sales since September 2022 and indicates a positive change in consumer spending trends.
However, the European Central Bank (ECB) is expected to start reducing borrowing costs from June. In a recent interview with Business Standard, ECB Chief Economist Philip Lane stated that the latest data has bolstered his confidence that inflation is gradually approaching the 2% target.
Trade recommendation: Trading in the channel 1.0730-1.0790 on the rebound from levels
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