ECB Rate Hike Uncertainty Boosts EURUSD

The Euro rose above $1.084 (EUR/USD), rebounding from a recent one-week low. Recent data suggests the ECB may deliver fewer rate hikes this year, boosting the Euro.

ECB Rate Hike Uncertainty Boosts EURUSD

Negotiated pay surged 4.7% in the first quarter compared to a year ago, nearing record levels from Q3 2023. This increase has prompted inflation warnings for the ECB, influencing their rate hike decisions.

PMI readings showed the private sector grew the most in a year in April, with faster increases in new orders and employment. This robust growth adds to the economic momentum.

Investor Rate Expectations

Investors now anticipate only 60bps of ECB rate cuts this year. This expectation shift has played a role in the Euro’s recent strength.

Fed’s Hawkish Stance on US Rates

Recent FOMC meeting minutes and Fed officials’ comments in the US indicate a hawkish stance. Due to concerns about disinflation progress, interest rates are expected to remain high. This approach contrasts with the ECB’s potential easing, highlighting different monetary policies across the Atlantic.

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