The EUR/USD pair saw a slight increase after five days of declines, trading around 1.1480 during Asian hours on Tuesday. Traders will be paying attention to German retail sales and unemployment rates from February, alongside preliminary Eurozone Harmonized Consumer Price Index (HICP) data for March that will be released later today.
François Villeroy de Galault, the Governor of the Bank of France, mentioned on Monday that if inflation driven by energy costs continues to grow, policymakers are ready to respond. He suggested that the energy crisis stemming from the conflict in Iran is likely to lead to short-term inflation, even though the European Central Bank may not be able to stop an initial surge in prices.
Having gained over the previous five days, the Euro is on the rise as the US dollar declines. Still, there’s a chance for a rebound in the dollar due to a growing preference for safe-haven currencies amidst uncertainty surrounding Middle Eastern tensions.
According to the Wall Street Journal, President Donald Trump has expressed a willingness to end the Iran conflict without reopening the Strait of Hormuz, indicating a shift in his focus. But ongoing US military deployments send mixed signals and keep risks to global energy availability high.
Jerome Powell, the Chair of the Federal Reserve, stated on Monday that while there’s uncertainty linked to the Middle East, long-term inflation expectations in the United States remain steady. He emphasized that the Fed’s policy approach allows them to evaluate how the Iran situation might impact the economy.
New York Fed President John Williams noted that monetary policy is ready for unexpected events and mentioned to Reuters that Monday’s job market indicators were sending mixed signals.
