Ella 
EUR/USD extended losses for a second straight day, hitting a one-week low near 1.0870 during the Asian session on Friday. EUR/USD depreciated as the U.S. dollar strengthened and strong U.S. producer prices showed continued inflationary pressures in the economy.
The U.S. core producer price index held steady in February at an annual rate of 2.0%, beating expectations of 1.9%. The U.S. core producer price index rose 0.3% compared with the previous value of 0.5% and higher than the expected value of 0.2%.
In February, the U.S. producer price index increased at an annual rate of 1.6%, exceeding expectations of 1.1% and the previous value of 1.0%. Meanwhile, the producer price index rose 0.6% on a monthly basis, exceeding the expected and previous values by 0.3%.
The data adds to the complexity of the Fed’s rate cut schedule. The probability of a rate cut in March now stands at 1.0%, falling to 7.7% in May, according to the CME FedWatch Tool. The probability of a rate cut in June and July is relatively low, at 59.0% and 79.4% respectively.
The euro faces more headwinds as European Central Bank (ECB) policymakers maintain a dovish stance. European Central Bank policymaker Francois Villeroy de Galhau said on Wednesday that a spring interest rate cut is still a high probability. In addition, on Thursday, Yannis Stournaras, a member of the European Central Bank’s Governing Council, advocated an early interest rate cut.
