Ella 
EUR/USD fell back to the 1.0860 area in early Asian trading on Friday. A stronger U.S. dollar and rising U.S. Treasury yields supported EUR/USD’s retreat. Traders were looking at Germany’s IFO business sentiment index ahead of a speech by Federal Reserve Chairman Jerome Powell.
The U.S. Federal Reserve decided on Wednesday to keep its benchmark overnight lending rate at a range of 5.25% to 5.5%. Federal Reserve Chairman Jerome Powell did not mention the timing of a rate cut, but he expects a rate cut before the end of the year. The CME FedWatch tool shows that the futures market is pricing in an 80% probability that the Fed will start cutting interest rates at its June meeting.
In terms of data, the S&P Global Composite Purchasing Managers Index (PMI) in the United States in March was 52.2, compared with the previous value of 52.5. In addition, the manufacturing purchasing managers’ index rose to 52.5 in March from 52.2 in February, higher than the expected value of 51.7. The services purchasing managers’ index fell to 51.7 in March from the previous value of 52.3, lower than the expected 52.0.
On the other hand, the latest purchasing managers’ index survey released by the German Statistics Office on Thursday showed that the euro zone’s manufacturing purchasing managers’ index was 45.7 in March, compared with the previous value of 46.5 and lower than the expected value of 47.0. Meanwhile, the services PMI rose to 51.1 in March from 50.2 in February, above expectations of 50.5. The Eurozone composite PMI rose to 49.9 in March, compared with expectations for 49.7 and from 46.3 in February.
Next, traders will focus on the German IFO business sentiment index and speeches from Federal Reserve Chairman Jerome Powell and Fed official Barr on Friday. German retail sales for February and U.S. fourth-quarter gross domestic product (GDP) will be released next week. These events could bring clear direction to the EUR/USD currency pair.
