EUR/USD Halts Recent Decline As US Dollar Stabilizes
EUR/USD strives to gain ground after a five-day losing streak near 1.0800 during European trading hours on Wednesday. Still, the outlook of the major currency pair is uncertain as the US Dollar (USD) holds onto recent gains, with the US Dollar Index (DXY) clinging to gains near an almost three-week high at 104.40, amid expectations that less disruptive Unites States (US) President Donald Trump’s tariff agenda will have lesser impact on the US economic outlook.
On Monday, President Trump said at the White House that all impending levies will not be imposed as he may give a "lot of countries" breaks on tariffs. It seems that various leaders of US trading partners have managed to negotiate deals with Trump. Though a Trump-led trade war is widely anticipated to result in an economic slowdown globally, a war with fewer nations will limit the scope of economic turmoil.
Still, the confidence of US consumers is declining as Trump’s tariffs will lead to a significant decline in households’ purchasing power. On Tuesday, the Conference Board reported a sharp decline in the Consumer Confidence data for March, a leading sentiment indicator that anticipates consumer behaviour. The sentiment data came in at 92.9, significantly lower than the 100.1 seen in February.
Going forward, the major trigger for the US Dollar will be the US Personal Consumption Expenditures Price Index (PCE) data for February, which will be released on Friday. Economists expect the US core PCE inflation, which is the Federal Reserve’s (Fed) preferred inflation gauge, to have grown at a faster pace of 2.7% year-on-year, compared to the 2.6% increase seen in January.
In last week's policy meeting, the Fed revised its forecast for the core Personal Consumption Expenditures Price Index (PCE) for this year to 2.8%, up from the 2.5% projected in the December meeting.
Source: FXStreet
