Euro Weakens in Asia
EUR/USD remained weak and hovered around 1.1850 in Asian trading on Monday, maintaining selling pressure from Friday's session. The main cause was the renewed strength of the US dollar, causing the euro to lose its momentum for a rebound.
The dollar's strengthening was triggered by the nomination of Kevin Warsh as the Federal Reserve Chair candidate to replace Jerome Powell. Warsh is known for his historical preference for a strong dollar, so the market began to price in a more pro-dollar policy direction—and this immediately weighed on EUR/USD.
At the time of writing, the US Dollar Index (DXY) held near its weekly high of 97.33, indicating continued solid demand for the greenback. This situation makes it difficult for EUR/USD to move higher, especially when the market is sensitive to changes in interest rate expectations.
This week, the dollar is expected to be volatile due to a series of US economic data, including the release of the ISM Manufacturing PMI and, most notably, the Nonfarm Payrolls (NFP) on Friday. Strong employment data could extend the dollar's gains, while weaker data could give the euro room to recover.
From the European side, the main focus is on the preliminary Eurozone HICP (harmonized inflation) data for January, released Wednesday. Consensus expects headline inflation to fall to 1.7% year-on-year from 1.9% previously. If inflation does cool, market expectations for an ECB interest rate cut could strengthen—and that could potentially put further pressure on the euro in the short term. (asd)
Source: Newsmaker.id
