On Friday, EUR/USD saw a marginal decline of a quarter of a percent, hovering in the lower 1.0800s just beneath the 200-day Simple Moving Average (SMA). The pair’s movement has become more erratic since the Federal Reserve (Fed) policy meeting earlier in the week. Notably, the release of Eurozone and US flash PMI data for March on Thursday exacerbated volatility, revealing a stronger US economy compared to the euro area.
As traders prepare for the weekend, the likelihood of further market shifts remains heightened, with a lineup of central bank speakers poised to express their perspectives on Friday. Both the European Central Bank (ECB) and the Fed are scheduled to provide commentary.
EUR/USD: Central Bank Commentary Dictates Direction
During the European session on Friday, EUR/USD is trading in the 1.0830s, with central bank announcements expected to be pivotal for the pair’s trajectory as the week draws to a close. Notable figures set to address monetary policy matters include Bundesbank President Joachim Nagel, Fed Chairman Jerome Powell, and ECB Chief Economist Philip Lane.
The statements made by these officials could significantly influence the outlook for interest rates, which are determined by central banks. Interest rate decisions hold sway over currency values as they influence foreign capital inflows from investors seeking returns. Positive expectations of rate hikes typically bolster a currency, while expectations of rate cuts tend to have a negative impact. Presently, the ongoing debate revolves around the timing of future rate adjustments, with market consensus suggesting potential cuts by both the ECB and the Fed in June. Any deviation from this consensus could spur volatility in the market.
The first key speaker on the agenda is Bundesbank President Joachim Nagel, scheduled for 9:00 GMT. Nagel’s recent remarks have indicated greater concern for Europe’s growth prospects compared to his homeland. In February, he advocated for waiting until Q2 wage data before deciding on interest rate cuts, hinting at June as a plausible timeline for such adjustments.
At 13:00 GMT, Federal Reserve Chairman Jerome Powell will participate in a “Fed Listens” panel discussing current economic conditions and the pandemic’s impact on the economy. Vice-Chair Philip Jeffereson and Governor Michelle Bowman will also be present at the event.
Subsequently, at 16:00 GMT, Federal Reserve Vice-Chair for Supervision Michael Barr will engage in a virtual discussion on “International Economic and Monetary Design.”
At 17:00 GMT, ECB Chief Economist and Board Member Philip Lane will deliver a policy lecture on inflation and monetary policy at the Aix-Marseille School of Economics (AMSE).
Lastly, at 20:00 GMT, Federal Reserve Bank of Atlanta President Raphael Bostic will moderate a conversation on household finances at the 2024 Household Finance Conference, with a possibility of addressing interest rates during the discussion.
