USD continues its weakness against the majority of G10 counterparts, despite more optimistic Russo–Ukraine updates.
In the meantime, Eurozone inflation data is hot and has encouraged euro-buying as US data becomes more clear.
The pair has fallen from its multi-week highs at 1.1160s, but EUR/USD trades with healthy gains of 0.4% in the 1.130s. Even though the US dollar continues to be weaker than most of its G10 counterparts, despite recent tailwinds in global equity space that have subsided amid less optimistic headlines about Russo/Ukraine peace negotiations, EUR/USD is still trading with healthy on-the-day gains of 0.4% in the 1.1130s. Hot inflation readings from the Eurozone, which support the ECB’s recent shift towards ending QE and signaling rate increases in Q3, are another factor that could encourage euro buying.
Regional state CPI data released earlier in the session showed significant YoY and MoM gains ahead of the publication of preliminary German Consumer Price Inflation metrics March at 1300BST. The preliminary estimate of headline Spanish HICP inflation for March was 9.8%. This is well above the 8.1% forecast. The upcoming German inflation figures will be hot, which may not cause a market reaction. EUR/USD will soon shift its focus to the US data due to be released shortly thereafter. ADP, the US private payroll company, releases its March employment change estimate at 1315BST. Although ADP's metric is not a good predictor of the official NFP in recent weeks, traders will still take notice.
The final estimate of US GDP growth for Q4 2021 will soon be published at 1330BST. Fed's Thomas Barkin and Raphael Bostic will also be present, as well as remarks from Esther George and Esther George. All of these people support the Fed’s recent hawkish shift. The Fed's hawkishness/strong economic information is well priced in USD at this stage. Further profit-taking on US dollars longs combined with inflationary Eurozone data could well mean USD/USD stays supported above 1.100 and may see a move towards 1.200.