Anna 
The euro (EUR) is poised for its most substantial weekly decline in nearly four months, driven by a combination of factors including a resurgent US dollar and dovish signals from the European Central Bank (ECB).
Following the ECB’s decision to maintain interest rates at record highs on Thursday, the euro experienced a downward trajectory. While the market had anticipated unchanged rates, the ECB’s hint at potential rate cuts in June caught investors off guard. This contrasted with expectations for the Federal Reserve (Fed) to initiate rate cuts, as strong US consumer price data dampened hopes for imminent Fed action. Consequently, market projections for US rate cuts have been revised downward, with investors now expecting around 40 basis points (bps) of reductions, down from the previously anticipated 60 bps cuts for the year. The resultant uptick in US Treasury yields underscores the notable shift in interest rate sentiment.
Throughout Asian and early European trading sessions, the EUR/USD pair exhibited a downward trend. Today’s focal point lies on the release of the US Michigan Consumer Sentiment Index at 2:00 p.m. UTC. Should the data reveal stronger-than-expected figures, indicating an upswing in consumer confidence, EUR/USD is likely to extend its decline, potentially breaching the 1.07000 mark. Conversely, an outcome falling short of expectations could momentarily halt or even reverse the short-term bearish momentum in EUR/USD, with particular attention paid to the pivotal level of 1.07500. A breakout above this threshold could pave the way for further gains, targeting 1.07800.
