Anna 
The EUR/USD pair experienced a 1.1% decline, settling near 1.0739, attributed to robust US inflation figures that heightened expectations for aggressive monetary policy measures by the Federal Reserve (Fed).
On Wednesday, the US Bureau of Labor Statistics revealed a notable uptick in the annual Consumer Price Index (CPI), soaring from February’s 3.2% to 3.5% in March, surpassing the anticipated 3.4% mark. The core CPI, excluding volatile food and energy components, surged to 3.8% year-on-year. Both CPI metrics exhibited a monthly increase of 0.4%, surpassing the forecasted 0.3%. Consequently, US Treasury yields surged, and the likelihood of a June rate cut by the Fed dwindled to just over 20%, bolstering the US dollar.
Furthermore, minutes from the Federal Open Market Committee (FOMC) meeting underscored members’ uncertainty regarding the interest rate trajectory. The absence of a clear indication that inflation is steadily moderating towards the 2% target, coupled with a robust labor market, may prompt officials to adopt a more hawkish stance on monetary policy until economic indicators signal the feasibility of rate adjustments.
During the Asian session, EUR/USD exhibited sideways movement. However, attention now turns to the European Central Bank’s (ECB) Interest Rate Decision scheduled for 12:15 p.m. UTC, followed by the ECB press conference at 12:45 p.m. UTC, which is expected to provide insights into the ECB’s interest rate strategy.
Market sentiment leans towards the ECB maintaining the current interest rate at this meeting. Nevertheless, recent economic data from the eurozone has revealed a deceleration in inflation. Anticipation mounts for the ECB to potentially initiate monetary easing, with the first rate cut projected in June. Consequently, investors keenly await the post-meeting statement and officials’ remarks for indications of a dovish or hawkish stance.
Should the ECB signal a dovish outlook, downward pressure on the euro in the short term may intensify. Conversely, indications of prolonged maintenance of the base rate may substantially bolster EUR/USD. Traders remain poised to react to any shifts in ECB policy rhetoric, shaping near-term currency market dynamics.
