Ella 
In early trading in Asia on Wednesday, EUR/USD rebounded from the 2024 low of 1.0720 and rebounded to 1.0760 as the US dollar (USD) showed another selling trend. Investors are awaiting Wednesday’s German industrial production report, which is expected to show a monthly rate of -0.4% in December.
Philadelphia Fed President Patrick Harker said on Tuesday that the Fed made the right call last week by keeping interest rates steady amid prospects that could signal further declines in inflation.
Meanwhile, Cleveland Fed President Loretta Mester said she could open the door to a rate cut later this year if the economy develops as expected. Finally, Federal Reserve Chairman Powell said late Sunday that the central bank will still cut interest rates three times this year, which is expected to begin as early as May. The Fed’s delay in easing monetary policy may provide some support for the dollar in the short term. The Chicago Mercantile Exchange’s FedWatch tool shows traders are currently pricing in a 15% chance of a rate cut at the March meeting.
Data released by Eurostat on Tuesday showed that retail sales in the euro zone recorded a monthly rate of -1.1% in December, compared with an increase of 0.3% in the previous month, which was lower than market expectations of 1.0%. Eurozone retail sales recorded an annual rate of -0.8% in December, compared with -0.4% in November, which was higher than the consensus forecast of -0.9%.
European Central Bank (ECB) policymaker Pablo Hernandez de Cos said on Tuesday that he was confident that euro zone inflation would return to the 2% target and that the next step would be to cut interest rates. However, ECB Governing Council member Boris Vujcic said the central bank now needs to be patient before cutting interest rates to ensure wage costs do not translate into continued wage pressure.
