February 23, 2024

EUR/USD Stays Firm Around 1.1350, Feds and ECB Watched Closely

Bearish traders in the EUR/USD market took a break from losses around the 1.1350 regions as they entered into the new week and the European session. This came after two long weeks of unprecedented falling.

EUR/USD price chart. Source TradingView

The ECB Leads Opinions

The world-leading currency pair’s latest position may be directly linked to all recent optimism going on in the money market of late, as have hawkish comments coming from European Central Bank top officials, in the process of a slow Asian session.

Recent news of Ukraine officially requesting a meeting with Russia in order to resolve the political tensions between the two countries has gone a long way to calm the market, which was reacting to the possibility of a war, and it has reduced urgent demand for the US dollar as a crisis time safe-haven.

Nevertheless, recent statements ascribed to the European Central Bank’s Governing Council Members, Gabriel Makhlouf and Olli Rehn, was an obstruction to the pair’s traders as President Christine Lagarde of the ECB was expected to speak.

While Gabriel Makhlouf, the Governor of the Bank of Ireland, stands against the concerns raised in objection to an interest rate increase in June, Rehn’s position is that an overreaction to the rising inflation by the EBC may also impede economic growth throughout the Eurozone.

It should be stated here that the American dollar index consolidated during last Friday’s trade in spite of the low Treasury bond yields following President Joe Biden’s highlighting, alongside other leaders in the EU and UK, the direct risks involved in the event of a Russian invasion of Ukraine. 

March, the Month of Big Steps

However, the clamor about the Federal Reserve’s 0.50% interest rate increase in March has put under some control the EUR/USD loss rate.

The Chicago Mercantile Exchange Federal Watch Tool reveals an almost 50% chance of a 50 bps of Federal Reserve interest rate increase come March against a 0.25% movement. At first, specifically following the American CPI report, the money market was almost sure of a push in interest rates. 

With that, the initial reading of the Michigan Consumer Sentiment for this month dropped from 67.2 to around 61.7 last Friday. Against this background, the American ten-year Treasury bond yields are trying to recover around the 1.95% zone when it lost more than 11 bps earlier in the week. Furthermore, S&P futures made some gains in the early hours of trading today.   

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