The euro is recovering slightly today after the sharp losses it suffered against the US dollar during the previous two sessions, when it reached its lowest level since the beginning of March.
Today it is achieving gains of 0.1% and regaining the level of 1.08273 at 11:50 a.m. GMT.
The euro is set for a week that may be volatile, with the influx of a set of economic data from both the United States and the Eurozone, which will help markets on the both sides of the Atlantic build clearer perceptions about the potential path of inflation.
From the United States next Friday, markets are awaiting the Core Personal Consumer Expenditure (core PCE) Price Index for February, with expectations for inflation to hold steady at 2.8% on an annual basis and slow slightly to 0.3% on a monthly basis from 0.4%.
While the return of inflation to accelerate again in the United States may be the largest contributor to forming pressure on the euro this week.
Tomorrow, we are expected to witness a slight recovery in the Conference Board Consumer Confidence Index from in March after declining for the first time in three months in February. In addition, core durable goods orders are expected to grow again by 0.4% in February on a monthly basis after a similar contraction in January.
Also, this week, from the housing market, we are awaiting the February reading of pending home sales, with expectations that they will return to growth again, in addition to the initial unemployment claims this week, and confirmation of the fourth quarter reading of the gross domestic product and the University of Michigan Consumer Confidence Index.
As for the Eurozone, tomorrow we await the GfK consumer climate report in Germany, with expectations that negative sentiment will decline for the second month in a row, where sentiment was under the pressure of rising inflation and geopolitical concerns.
We also await the issuance of German multi-year bonds tomorrow, after the best auction of the year earlier this month. In Germany as well, we are awaiting retail sales for February and unemployment for March. While the Eurozone data week ends with the preliminary reading of the Consumer Price Index in France and Italy.
Market expectations indicate a possible three-time cut in interest rates, which the Federal Reserve and the European Central Bank will begin next June.
While the acceleration of inflation in core personal consumer spending prices again, contrary to current expectations, may contribute to shaking these expectations a little, and it seems that the markets are very committed to the hypothesis that the path of cutting rates will actually begin in June, and thus the question is about the number of subsequent cuts.
