The EUR/USD pair is hovering around 1.0850, striving to recover from recent losses as it trades slightly higher in the Asian session on Wednesday. Despite negative consumer confidence data from the EU on Tuesday, the Euro is under pressure with eyes set on the upcoming ECB event.
EURUSD Daily Chart
Market participants have factored in roughly 120 bps of rate cuts for this year, sparking a debate about when the ECB will initiate a reduction in the region’s policy rate. ECB President Lagarde hinted at a possible move sometime in the summer.
Even though inflation has exceeded the European Central Bank’s target, policymakers seem to favor a cautious stance. The weak economic fundamentals within the region restrict any potential strengthening of the European currency.
GBP/USD Rebounds with Positive Market Sentiment
Meanwhile, GBP/USD is rebounding from recent gains, trading near 1.2690 during early European hours on Wednesday. The optimistic market sentiment made it hard for the USD to gain strength early Tuesday, supporting GBP/USD’s upward push.
GBPUSD Daily Chart
AUD/USD Eyes Recovery Amid Improved Preliminary PMI
The AUD/USD pair is also trying to trend upwards, trading around 0.6580 on Wednesday following the release of improved preliminary PMI from Australia by Judo Bank and S&P Global. However, the movement of the greenback and signs of a slow economic recovery in China post-pandemic are expected to continue influencing the AUD and keeping its price action relatively muted.
AUDUSD Daily Chart
Market Outlook: Anticipation and Cautious Sentiment
Overall, the market anticipates the ECB’s decision on rate cuts, while the US Dollar remains stable. The GBP/USD and AUD/USD pairs show signs of recovery, but the overall sentiment remains cautious.
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