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EURUSD:
EUR/USD remains stable around 1.0880 during Asian trading hours, with the US Dollar (USD) remaining resilient ahead of Monday’s retail sales data release. However, the dollar faced headwinds after the University of Michigan (UoM) reported on Friday that its preliminary consumer sentiment index for March fell to 57.9 – the lowest reading since November 2022 – from the previous reading of 64.7. The figure was also below the consensus forecast of 63.1.
Markets widely expect the Federal Reserve (Fed) to maintain its current policy stance when it concludes its two-day meeting on Wednesday. According to CME’s FedWatch tool, traders estimate the probability of a quarter-point rate cut by June at nearly 75%.
The euro (EUR) strengthened after news that Germany reached an agreement to renegotiate debt and significantly increase government spending. Friedrich Merz, the incoming Chancellor, reached the agreement with the Green and Social Democrat parties on Friday, ahead of Tuesday’s crucial parliamentary vote on reforming borrowing rules. If the proposal receives a two-thirds majority, the spending increase plan could have a significant impact on EUR/USD.
Meanwhile, European Central Bank (ECB) Vice President Luis de Guindos expressed concern on Sunday, saying that President Trump’s policies are creating more economic uncertainty than during the COVID-19 crisis, Bloomberg reported. Guindos noted that the new U.S. administration seems less inclined toward a multilateral approach that promotes cooperation among jurisdictions to solve global problems, a shift he cited as a major source of instability.
In addition, ECB Governing Council member and Bank of France Governor Francois Villeroy de Gallo emphasized the need for the euro to play a more prominent role on the global stage. In an interview with La Tribune Dimanche newspaper published over the weekend, Gallo called for a “powerful savings and investment union” to attract international investors to the euro.
Trading recommendation: SELL 1.0880, SL 1.0930, TP 1.0770
Origin: FreshForex
