Ella 
EUR/USD attempted to recoup its recent losses, rising slightly to around 1.0850 in Asia on Wednesday. However, the preliminary consumer confidence index released by the European Commission on Tuesday showed that consumer confidence in economic activities has dropped, and the euro (EUR) has encountered downward pressure. The consumer confidence index fell to -16.1, which was expected to be -14.3, and the previous value was -15.0.
Market participants will focus on HCOB Purchasing Managers Index (PMI) data from the euro zone and Germany on Wednesday. On Thursday, the European Central Bank will announce its interest rate decision and issue a monetary policy statement. The ECB typically predicts that interest rate conditions will remain stable until the summer unless there are significant changes in fundamental economic indicators.
The U.S. dollar index held steady after recent gains as buying interest in the greenback continued to rise, driven by risk aversion. This behavior may be related to rising geopolitical tensions in the Middle East. However, a fall in short-term U.S. Treasury yields could weigh on the U.S. dollar and therefore be positive for the EUR/USD pair. At press time, the two-year U.S. Treasury yield fell to 4.33%, a drop of 87%.
Market sentiment suggests the Fed is less likely to cut interest rates in March. However, markets are fully pricing in a 25 basis point rate cut from the Fed, with a 50% chance of a substantial 50 basis point cut in May. Traders are likely awaiting U.S. S&P Global Purchasing Managers Index (PMI) data due on Wednesday.
