EUR/USD advances further toward 1.1350 on intense US Dollar weakness
EUR/USD is holding firm, eyeing 1.1350 early Wednesday on the back of a sharp sell-off in the US Dollar. Renewed trade jitters, along with fresh concerns about the US fiscal health, add further pressure on the Greenback.
The focus now is on the ECB and Fed-speak.
Monetary policy divergence between the Federal Reserve and the European Central Bank (ECB) continues to influence EUR/USD dynamics.
The Fed has held rates steady and remains cautious on rate cuts, while the ECB lowered its deposit rate by 25 basis points to 2.25% last month and could ease again as early as June.
Markets are still pricing in two rate cuts from the Fed by year-end, driven by subdued April inflation and receding trade-related risks.
Back at the ECB, officials are treading carefully on the rate-cut front. Isabel Schnabel said the bank is still on track to bring inflation back to 2%, but flagged risks like a possible trade war that could drive prices up again, so she’s not in favour of easing policy just yet. Meanwhile, Klaas Knot said it’s too soon to decide on a June cut, pointing to the need for more clarity on how US and EU trade policies are feeding into inflation.
Source: Fxstreet
