The Eurozone's final consumer price index (CPI) data for April has been released, marking a quiet day on the region's economic calendar. In addition to the CPI data, the agenda also included speeches from several European Central Bank (ECB) members, including Bosjan Vasul, Luis de Guindos, Boris Vučić, Robert Holzmann and Martins Kazaks. .
These events come amid market expectations that the ECB could cut interest rates in June, with recent comments from ECB officials suggesting a cautious approach to monetary easing.
The market consensus is that interest rates will be cut next month. Nevertheless, even the more dovish ECB members appear to support gradual easing beyond an initial rate cut.
The market appears satisfied with current year-end pricing, which reflects expectations that interest rates will be cut by 72 basis points, and this sentiment is unlikely to change before the ECB's June meeting.
The euro is showing some resilience against the dollar, but it may not have enough momentum to firmly move above the 1.0900 level heading into the weekend. Technical resistance at this level does not look particularly strong.
Meanwhile, the spread between the two-year swap rates between the US dollar and the euro has narrowed to 140 basis points from April's peak of 160 basis points. However, it remains below the level before April.
Going forward, the exchange rate is expected to remain stable within a range of 1.08 to 1.09, although there may be some downward pressure in the short term. This prediction is in line with the base scenario for the currency pair predicted by market analysts.
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