Ella 
In early Asian trading on Thursday, EUR/USD fluctuated higher to 1.0672. EUR/USD was boosted by renewed selling pressure on the U.S. dollar and maintaining risk appetite. Investors will focus on the customary release of U.S. initial jobless claims for last week, the Philadelphia Fed manufacturing index, the Conference Board’s leading indicators and existing home sales due to be released later on Thursday.
Hopes for the Federal Reserve (FED) to cut interest rates have been dashed. Federal Reserve Chairman Jerome Powell commented on Tuesday that recent data clearly did not give the Fed greater confidence and suggested that achieving the Fed’s 2% target may take longer than expected. Hawkish comments from Fed Powell may provide some support to the dollar in the short term and limit the upside for EUR/USD. Investors see a nearly 71% chance of the Fed cutting interest rates in September, according to the CME Group’s FedWatch tool.
On the other hand, investors have increased their bets that the European Central Bank (ECB) will cut interest rates in June. European Central Bank policymaker Joachim Nagel said on Wednesday that a June interest rate cut was looking increasingly likely, but some components of upcoming inflation data appeared to remain higher than expected. Meanwhile, ECB policymaker Bostjan Vasle said that if deflation continues as expected, deposit rates should fall to 3% by the end of this year from the current record high of 4%. Interest rate differentials have been the main driver of EUR/USD. The European Central Bank’s dovish stance dragged down the euro (EUR), which was negative for EUR/USD.
