14 Feb 2025

EUR/USD experiences minimal movement as market participants exercise caution in anticipation of the Eurozone GDP and US Retail Sales figures scheduled for release on Friday. It is anticipated that the Eurozone GDP will maintain a steady growth rate of 0.9% year-on-year for the fourth quarter, in line with expectations. Meanwhile, US Retail Sales are projected to decline by 0.1% month-on-month in January, following a prior increase of 0.4%.

EUR/USD remains stable at approximately 1.0460 during the Asian trading session on Friday, following three consecutive days of gains. The pair experienced an uptick after US President Donald Trump postponed the implementation of reciprocal tariffs. Concurrently, the US Dollar (USD) is under pressure due to falling US Treasury yields, despite persistent worries regarding a global trade conflict.

Market participants are now shifting their attention to the forthcoming US Retail Sales report, which is the last significant economic announcement of the week. Analysts anticipate a slight monthly decline of 0.1% in January, following a previous increase of 0.4%.

The US Dollar Index (DXY), which measures the USD against six major currencies, continues to decline for the fourth consecutive session, trading near 107.00. As of the latest update, US Treasury bond yields are recorded at 4.31% for the 2-year note and 4.53% for the 10-year note.

In the United States, Core PPI inflation increased to 3.6% year-over-year in January, exceeding the anticipated 3.3% but falling slightly short of the revised figure of 3.7% (previously noted as 3.5%). This development has strengthened the belief that the Federal Reserve (Fed) will delay any rate cuts until the latter half of the year. The ongoing high inflation rates may further bolster the Fed's position to maintain interest rates within the range of 4.25% to 4.50% for a prolonged duration.

The Euro may encounter challenges as European Central Bank (ECB) official Boris Vujčić remarked on Thursday that the markets are anticipating three rate cuts this year, a prediction he deemed reasonable, as reported by Reuters. Vujčić also indicated that the ECB might eliminate its reference to a "restrictive policy" in the March statement, pointing to expectations of a rapid decrease in services inflation in the upcoming months.