Anna 
In Thursday’s trading session, the EUR/USD pair edged higher into the 1.0680s, continuing a modest climb from earlier in the week when it hit lows of 1.0601 in April.
The recent uptick prompts speculation on whether the EUR/USD movement signifies a correction in its downward trend or hints at a potential reversal. The pair’s robust recovery, boasting an 80-pip gain within 36 hours, fosters optimistic sentiments among traders.
The rebound in EUR/USD received a boost from remarks by European Central Bank (ECB) President Christine Lagarde during a speech in Washington on Wednesday. Lagarde emphasized that despite acknowledging ongoing challenges, particularly concerning inflation, she underscored, “The game (of fighting inflation) is not over.” Lagarde’s cautious tone diverges slightly from some ECB counterparts who view inflation as behaving as expected, introducing a hint of uncertainty regarding the timing of potential interest rate cuts in June, as anticipated by markets. The prospect of prolonged higher interest rates is seen as beneficial for the Euro, attracting increased inflows of foreign capital.
Echoing concerns about sluggish growth in Europe, Rabobank FX Strategists predict that while the Eurozone may not face a crisis, persistently slow growth and fiscal pressures could weaken the Euro’s defenses. They suggest a potential decline to 1.0500, with downside risks prevailing.
Conversely, EUR/USD faced pressure from discussions surrounding the Federal Reserve’s stance on interest rates. The pair experienced a decline in early April as expectations for Fed rate cuts in June diminished amid signs of resilient inflation and robust macroeconomic indicators.
Federal Reserve Chairman Jerome Powell’s recent comments hinted at an extended period of high-interest rates due to ongoing challenges in combating inflation. The release of the Fed’s Beige Book reiterated concerns about sluggish progress in inflation but noted stronger-than-expected growth and employment figures.
The prevailing sentiment suggests that the Fed is inclined to maintain relatively high interest rates until inflationary pressures are adequately addressed. Market indicators, such as the CME FedWatch tool, reflect diminished expectations of rate cuts in June, with a greater probability assigned to potential cuts by September.
