ECB plans to keep interest rates unchanged | 11 April 2024

Events to watch out for today:

15:15 EET. EUR - Publication of ECB key interest rate decision / Monetary Policy Report

15:30 EET. USD - Number of initial applications for unemployment benefits / Producer price index

15:45 EET. EUR - ECB press conference

20:30 EET. USD - FOMC member Rafael Bostic will give a speech

EURUSD:

EURUSD is near 1.0740 in the early Asian session on Thursday. An unexpected rise in the US CPI inflation data for March led the US dollar (USD) to hit yearly highs and put pressure on the major pair. Today, investors will be closely watching the European Central Bank (ECB) interest rate decision and ECB press conference, as well as the release of the US Producer Price Index (PPI) report.

The ECB is expected to keep interest rates at a record high at its April meeting on Thursday, but ECB President Christine Lagarde is likely to discuss inflation data and the possibility of a rate cut in June. The Federal Reserve (Fed) may postpone its easing cycle this year due to a strong economy and surprises in the form of rising inflation. The ECB is pushing for an independent policy, but the interest rate divergence between the Fed and the ECB could weigh on the Euro (EUR) and put pressure on EUR/USD.

An unexpected rise in US inflation data in March triggered speculation that the US central bank would postpone an interest rate cut. Following the release of the data, the US dollar rose to new yearly highs to 105.30. The US Consumer Price Index (CPI) rose 0.4% month-over-month in March, compared to a forecast of a 0.3% rise. On a year-over-year basis, the CPI rose 3.5% compared to expectations for a 3.4% increase, the Labor Department said Wednesday.

The core consumer price index, which excludes volatile food and energy, rose 0.4% month-over-month in March, compared with the market consensus of 0.3%. Meanwhile, the core index rose 3.8% versus expectations for a 3.7% increase. Later on Thursday, the US Producer Price Index for March and weekly initial jobless claims will be released.

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