■ Thursday's ECB meeting concluded with no changes to current monetary policy settings, maintaining a cautious stance.
■ Federal Reserve Chair Powell hints at potential rate reductions later this year, contingent on inflation trends.
■ Market focus shifts to upcoming Eurozone GDP figures and the critical US employment report for February.
The EUR/USD currency pair continues its ascent during Friday's Asian trading session, establishing new multi-week peaks in the mid-1.0900 range. This upward movement follows the European Central Bank's decision to maintain its current policy stance on Thursday, reflecting the institution's ongoing commitment to steering inflation back toward target levels. Market participants now turn their attention to the impending release of US employment data, with the currency pair currently hovering around 1.0947, showing marginal daily gains.
Yesterday's ECB policy meeting resulted in unchanged interest rates across all facilities, keeping the main refinancing rate at 4.5%, the marginal lending facility at 4.75%, and the deposit facility at 4.0%. Policymakers reiterated their intention to maintain restrictive monetary conditions until inflation demonstrates sustainable movement toward the 2% target. Market analysts increasingly anticipate potential policy easing beginning in June, provided inflation metrics continue their downward trajectory.
Across the Atlantic, Federal Reserve Chair Jerome Powell suggested during his congressional testimony that interest rate reductions might become appropriate later this year if inflation developments remain favorable. However, Powell emphasized the data-dependent nature of such decisions, leaving the timing and magnitude of potential cuts open to interpretation. Current market pricing reflects expectations for an initial rate reduction in June, followed by additional cuts totaling 100 basis points by year-end.
The financial markets' immediate focus centers on Friday's US labor market report, encompassing nonfarm payrolls, unemployment statistics, and wage growth figures. These indicators will significantly influence the Federal Open Market Committee's assessment of inflationary pressures and labor market conditions. Simultaneously, the revised Eurozone GDP growth figures will provide crucial insights into the regional economic landscape. Collectively, these data releases are poised to determine the near-term directional bias for the EUR/USD currency pair.
