19 March 2024, EUR/USD
EURUSD:
EUR/USD is declining amid a stronger US dollar at the start of the Asian session on Tuesday. The Federal Reserve (Fed) monetary policy meeting on Wednesday will be in the spotlight and rates are expected to remain unchanged. Meanwhile, cautious market sentiment could boost the US Dollar against the Euro.
The latest US economic data showed that inflation in the US economy remains at high levels, and this overshot market expectations for the first rate cut in June. Fed Chairman Jerome Powell said two weeks ago that the central bank is not far from the confidence needed to cut rates, while some Fed officials expect the first rate cut could come later this year or in the summer.
The European Central Bank (ECB) decided to keep borrowing costs at record highs at its March meeting. However, central bank policymakers have signaled progress in easing inflation and have begun discussing a rate cut. ECB Governing Council member Pablo Hernandez de Cos said the central bank could start cutting interest rates in June if euro zone inflation continues to fall. Meanwhile, ECB chief Mario Centeno said lower borrowing costs could help prevent a recession in the eurozone.
ECB Governing Council member Klaas Knot marked the first rate cut for June and expects three rate cuts this year, while ECB President Christine Lagarde said June is the earliest time to cut interest rates after the ECB lowered its inflation forecasts and suggested it will reach its 2% target in 2025.
The Fed will announce its interest rate decision on Wednesday. The Fed is expected to leave benchmark interest rates unchanged at its March meeting in the 5.25%-5.50% range. Investors estimate the probability that the Fed will cut rates in July is nearly 73%, according to CME FedWatch Tools.
Trade recommendation: Trade buy orders when reaching from the price of 1.0890. Sell at the price level of 1.0845.
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