EUR/USD rises to near 1.0870 after the comments from ECB members, focus on US PCE
- EUR/USD gains ground as ECB members doubted the interest rate cut in March.
- ECB’s Gediminas Simkus expressed confidence that the data would not support a rate cut in March.
- ECB’s Martins Kazaks showed confidence in monetary policy but advocated for patience for the time being.
- Traders are poised to focus on the US PCE Price Index before making aggressive bets on the US Dollar.
EUR/USD moves higher to near 1.0870 during the European session on Friday. This could be attributed to the little hawkish comments from the European Central Bank’s (ECB) members. ECB policymaker Gediminas Simkus expressed confidence that the data would not support a rate cut in March. Simkus stated that rate cuts are more likely as the year progresses, and there is less optimism within the ECB compared to market expectations at the moment.
Another ECB member, Martins Kazaks, conveyed confidence in monetary policy but advocated for patience for the time being. Kazaks mentioned that while interest rates should eventually start to decrease, the ECB is not in a rush to begin the process. He emphasized that cutting rates too early would be worse than waiting a bit longer.
However, the Euro encountered a challenge following the release of the European Central Bank (ECB) interest rate decision on Thursday. The ECB opted to keep its interest rates unchanged for a third consecutive meeting, resulting in downward pressure on the Euro (EUR). This, in turn, has had a dampening effect on the EUR/USD pair. The ECB maintained its Main Refinancing Operations Rate at 4.50%, and the Deposit Facility Rate at 4.0%.
On the flip side, the stronger-than-expected Gross Domestic Product (GDP) Annualized figure from the United States has provided support for the US Dollar (USD), reinforcing the downward pressure on the EUR/USD pair. Market participants will closely monitor the release of the Personal Consumption Expenditures (PCE) Price Index data on Friday for additional insights into US economic conditions.