Ella 
EUR/USD maintained bearish consolidation on Wednesday in Asia, trading within a narrow range around 1.0555, its lowest level since March 16.
The U.S. dollar (USD) remains firmly supported near a 10-month high and continues to act as headwinds for the EUR/USD pair as growing sentiment grows that the Federal Reserve (Fed) will keep interest rates higher for longer. . Indeed, the Fed last week stuck to its more hawkish policy bias and warned that still weak inflation levels could tempt the central bank to raise interest rates at least once more before the end of the year.
In addition, the latest speeches by several Federal Reserve officials and the resilience of the U.S. economy once again confirmed the Fed’s expectations for further tightening of policy. This outlook still supports rising U.S. bond yields and continues to support the dollar. In addition to this, a generally weaker risk tone also favored safe-haven currencies and weighed on EUR/USD.
In an environment where the market continues to worry about China’s real estate crisis, concerns about the economic headwinds caused by rapidly rising borrowing costs have suppressed the market’s preference for high-risk assets. Coupled with the dovish interest rate decision announced by the European Central Bank at the beginning of the month, this shows that the downward resistance of EUR/USD is still minimal.
The European Central Bank cut its inflation and gross domestic product growth forecasts for 2024 and 2025, suggesting it may not raise interest rates for now. Additionally, speculation that GDP may contract in the second half of the year reaffirms the prospect that the European Central Bank’s 14-month policy tightening cycle may have peaked, which benefits EUR/USD bears.
Traders are now looking for some impetus from Germany’s GfK consumer sentiment index ahead of U.S. durable goods orders data due later in early U.S. trading. Market focus will then turn to German inflation, final U.S. GDP and Federal Reserve Chairman Jerome Powell’s speech on Thursday. Then there’s Friday’s U.S. core PCE price index.
