The EUR/USD pair is currently trading around 1.1793. The market shows moderate volatility, reacting to the latest macroeconomic data from Europe and the upcoming PPI release from the US. The pair remains in consolidation, as the impulses from inflation data and monetary policy signals are too limited to trigger a decisive breakout. Investors remain cautious, monitoring both risk-off sentiment and expectations regarding further decisions from the ECB and the Fed.
Source: xStation5
What is shaping the EUR/USD today?
Inflation and GDP data in Europe
Today, preliminary consumer inflation readings were released from France and Spain. In France, CPI increased by 0.7% month-on-month and 1.0% year-on-year in February, while HICP rose 0.8% m/m and 1.1% y/y, above forecasts, suggesting a slight acceleration in price pressures. In Spain, CPI rose 2.3% y/y and HICP 2.5% y/y, also exceeding expectations. Meanwhile, France’s GDP for Q4 came in at 0.2% q/q, with consumer spending rising 0.5% m/m, confirming stable, albeit moderate, economic growth.
In Germany, the market is awaiting the official HICP and CPI readings at 14:00 CET. Earlier data from individual states suggest a slight slowdown in price pressures, with annual inflation remaining around 2.1% y/y, keeping the euro in a zone of moderate support ahead of potential ECB reactions.
PPI and the situation in the US
The US Producer Price Index (PPI) will be released at 14:30 CET. Forecasts point to a slowdown in the growth rate to +0.3% m/m from the previous +0.5%, with annual growth expected around +2.6% y/y. If the readings match or come in below expectations, the dollar could weaken, supporting EUR/USD; higher-than-expected data could have the opposite effect.
Risk-off sentiment and market reactions
Despite the moderate rise in the euro against the dollar, markets remain cautious ahead of the key releases from Germany and the US. EUR/USD continues to trade in consolidation around 1.1793, with short-term fluctuations limited.
Expectations for the Fed and ECB
Markets are counting on the relative independence of the new Fed chair, expecting that rates will not be cut abruptly. This provides the dollar with some support but limits sudden market moves, including a sharp USD appreciation against the euro. Meanwhile, stable inflation and GDP data in Europe suggest that the ECB will continue to maintain a cautious approach to interest rate adjustments.
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