EUR/USD Holds Steady Above 1.0900 Amid Mixed Market Signals

During Wednesday’s Asian trading session, the EUR/USD pair maintained its position above the 1.0900 mark, halting its previous day’s decline from a peak near 1.0965 – the highest since August 11. Currently hovering around 1.0915-1.0920, the pair shows a slight increase of under 0.10% for the day, influenced largely by fluctuations in the US Dollar (USD). The USD Index (DXY), a measure against a group of currencies, couldn’t fully leverage its recent modest recovery from a near three-month trough, thereby supporting the EUR/USD’s strength. The Federal Reserve’s recent minutes suggested a continued preference for elevated interest rates, boosting US Treasury bond yields and a temporary uptick in USD value on Tuesday.

Despite this, market sentiment leans towards the Fed maintaining stable rates, anticipating a potential rate reduction at the April 30-May 1 meeting. This outlook has led to a decrease in the yield of the 10-year US government bond, limiting gains for the USD. Concurrently, hawkish comments from ECB President Christine Lagarde have bolstered the Euro, providing additional momentum to the EUR/USD pair. Lagarde’s caution against premature optimism on inflation has tempered expectations of an imminent ECB rate cut. Investors remain cautious, looking for sustained buying signals before betting on the pair’s continued rise beyond key averages like the 100- and 200-day SMAs.

With no significant data from the Eurozone due on Wednesday, focus shifts to the US economic calendar, featuring key releases such as Weekly Initial Jobless Claims, Durable Goods Orders, and the revised Michigan Consumer Sentiment Index. These factors, along with US bond yields and overall market sentiment, are expected to impact USD demand and subsequently influence the EUR/USD pair’s movement.