Ella 
In early trading in Asia on Wednesday, the EUR/USD continued to fall to around 1.0620, rebounding from the annual low of 1.0600. However, hawkish comments from Federal Reserve (FED) officials and safe-haven flows could boost the US dollar (USD) and limit EUR/USD upside in the short term.
On Tuesday, Federal Reserve Chairman Jerome Powell said the U.S. economy is performing quite strongly. Powell further pointed out that recent data indicate a lack of significant progress in inflation this year and that it will take “longer than expected” to achieve confidence that inflation will fall to the 2% target. Fed Powell’s speech maintaining a hawkish bias provided some support for the dollar and dragged EUR/USD lower.
In terms of data, the number of new housing starts in the United States in March was 1.32 million units, a decrease of 14.7% month-on-month, and the previous value was an increase of 12.7% (revised value was 10.7%). U.S. building permits fell 4.3% from February’s 2.3% gain (revised to 1.9%). Finally, industrial production recorded a monthly rate of 0.4% in March, compared with a 0.4% increase in February, in line with market expectations.
In the euro zone, there is growing speculation that the European Central Bank will start cutting interest rates in June due to the weakening economic outlook in the euro zone and cooling of core inflationary pressures. European Central Bank President Christine Lagarde said on Tuesday that the European Central Bank will still cut interest rates in the short term, but it will depend on any major shocks. Lagarde also said that the European Central Bank will pay close attention to oil prices in the context of escalating tensions in the Middle East. Later on Wednesday, the euro zone’s Harmonized Index of Consumer Prices (HICP) for March will be released. In addition, European Central Bank President Cipollone, Schnabel and Lagarde will also give speeches.
