Anna 
The EUR/USD pair experienced a modest rise on Wednesday, hovering in the 1.0860s against the US Dollar (USD) following the release of robust German trade data. The country’s Trade Balance for January surged to €27.8 billion, surpassing expectations of €21.5 billion and the previous surplus of €23.3 billion, as reported by Statistisches Bundesamt Deutschland (SBD).
The data indicates increased demand for Euros from foreign importers of German goods, complementing the positive momentum generated by strong Eurozone PMI data released the previous day. This contrasts with lackluster US factory and PMI data, contributing to a temporary weakening of the Dollar.
The Euro’s appeal has been further underscored by a recent survey from a London-based think tank, revealing that approximately 15 central banks anticipate boosting their reserves of Euros in 2024-25. This preference for the Euro among major central banks reflects renewed positivity surrounding Eurozone bond yields, which have moved into positive territory after years of negative rates. The relatively robust outlook for the Eurozone, despite expectations of interest rate cuts, has attracted central bankers to the Euro.
Looking ahead, Eurozone Retail Sales data is scheduled for release later in the day, with expectations of a 1.3% decline in January YoY but a 0.1% rise MoM. A reading significantly higher than anticipated could further boost the Euro. The key event for the week is the European Central Bank (ECB) policy meeting on Thursday, where analysts are anticipating a potential shift in communication, possibly signaling a change in the ECB’s stance on rate cuts. Some analysts suggest that March might be the opportune time for the ECB to provide more explicit guidance.
