Euro sits tight awaiting Powell speech

Published on 07.03.2024 10:09

The Euro is sitting tight against the greenback as we get ready to enter the European session on Thursday, slightly below its six-week high of 1.0915 reached in the prior session following dovish remarks by Federal Reserve (Fed) Chair Jerome Powell during his testimony before the House Financial Services Committee. Market participants will now await an announcement from the European Central Bank (ECB) which is set to announce its Monetary Policy Decision later in the day.

The ECB is anticipated to maintain the Rate on Deposit Facility at 4.0%, marking the fourth consecutive meeting where the rate will remain on hold. Alongside this decision, the ECB will release updated economic forecasts. ECB President Christine Lagarde's remarks during the post-meeting press conference will be closely scrutinized for insights into the central bank's monetary policy stance and economic outlook moving forward.

Eurozone Retail Sales figures released yesterday which came in above analysts’ forecasts seem to have provided a boost to the Euro. In January, Eurostat reported that the Eurozone retail sector continued to contract annually by 1%, remaining below the anticipated 1.3% decline. This follows a 0.5% decrease in December. However, there was a slight improvement in month-on-month Retail Sales, with a 0.1% rise as forecasted, compared to the previous contraction of 0.6%.

Weaker employment data from the United States  added to the downward pressure on the US Dollar . February's US ADP Employment Change was reported at 140K, slightly below the anticipated 150K but an improvement from the previous 111K. Additionally, January's US JOLTS Job Openings declined to 8.863M from December's 9.026M, missing the market forecast of 8.900M. The next focus for investors regarding the employment market will be the release of the non farm payrolls report on Friday.

Looking further ahead today, the main drivers of the EUR/USD currency pair will be the release of the latest interest rate decision from the ECB where rates are expected to remain on hold at 4 percent.

From the US it will be the testimony of US Federal Reserve president Jerome Powell which may provide a boost to the Euro if he continues his dovish stance from Tuesday’s appearance.