The EUR/USD currency pair is trading in a positive zone near 1.0610 during the early Asian session on Wednesday. This positive momentum is mainly attributed to the continued correction in the US Dollar (USD), driven by dovish remarks from Federal Reserve (Fed) officials.
Several Fed policymakers have made dovish-leaning comments, expressing concerns that elevated long-term US bond yields could hinder their willingness to raise interest rates in upcoming meetings. Atlanta's Fed President Raphael Bostic stated that the current monetary policy is already restrictive, suggesting that additional rate hikes are unnecessary. This sentiment is in line with the dovish trajectory established by other Fed colleagues, including Minneapolis Fed President Neel Kashkari.
The US Dollar Index (DXY) is losing ground and trading lower, currently around 105.70. This decline in the USD started in the previous week and has continued despite a minor recovery in US Treasury yields on Tuesday. The 10-year US Treasury bond yield is currently at 4.64%.
Investors are keeping a close eye on economic data, particularly inflation figures. The Producer Price Index (PPI) is scheduled for release on Wednesday, followed by the FOMC meeting minutes and the Consumer Price Index (CPI) on Thursday.
On the other hand, an uptick in German bond yields may limit the EUR/USD pair's advance, as market participants anticipate the European Central Bank (ECB) to pause its tightening cycle. Francois Villeroy de Galhau, a member of the ECB Governing Council and President of the Bank of France, expressed the view that further rate hikes are not currently the right course of action.
ECB President Christine Lagarde has also indicated that the key ECB interest rates have reached levels that, if maintained for a sufficient duration, will contribute to achieving the target of bringing inflation back to 2%. She remains optimistic about this goal and expressed confidence in Europe's gas reserves situation.
Projections also suggest a potential slowdown in Germany's inflation, which could strengthen the notion that the ECB will keep interest rates unchanged. These factors collectively influence the EUR/USD exchange rate.
Several Fed policymakers have made dovish-leaning comments, expressing concerns that elevated long-term US bond yields could hinder their willingness to raise interest rates in upcoming meetings. Atlanta's Fed President Raphael Bostic stated that the current monetary policy is already restrictive, suggesting that additional rate hikes are unnecessary. This sentiment is in line with the dovish trajectory established by other Fed colleagues, including Minneapolis Fed President Neel Kashkari.
The US Dollar Index (DXY) is losing ground and trading lower, currently around 105.70. This decline in the USD started in the previous week and has continued despite a minor recovery in US Treasury yields on Tuesday. The 10-year US Treasury bond yield is currently at 4.64%.
Investors are keeping a close eye on economic data, particularly inflation figures. The Producer Price Index (PPI) is scheduled for release on Wednesday, followed by the FOMC meeting minutes and the Consumer Price Index (CPI) on Thursday.
On the other hand, an uptick in German bond yields may limit the EUR/USD pair's advance, as market participants anticipate the European Central Bank (ECB) to pause its tightening cycle. Francois Villeroy de Galhau, a member of the ECB Governing Council and President of the Bank of France, expressed the view that further rate hikes are not currently the right course of action.
ECB President Christine Lagarde has also indicated that the key ECB interest rates have reached levels that, if maintained for a sufficient duration, will contribute to achieving the target of bringing inflation back to 2%. She remains optimistic about this goal and expressed confidence in Europe's gas reserves situation.
Projections also suggest a potential slowdown in Germany's inflation, which could strengthen the notion that the ECB will keep interest rates unchanged. These factors collectively influence the EUR/USD exchange rate.
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