EUR/USD benefits from softer dollar amid fresh statements by Fed officials

The crucial 200-day moving average is quickly approaching for the EUR/USD pair, indicating a wave of cautious optimism in the currency markets.

ECB optimism about inflation and future rate decreases contrasts with mixed views from the Fed and worse US housing data.

Updates to the economic outlook are anticipated from the US Durable Goods Orders and Consumer Confidence data. Although the Euro is still far from regaining the 200-day moving average (DMA) at 1.0839, it has partially recovered from its Friday losses vs the US Dollar. Fed officials’ remarks notwithstanding, the Greenback has lost steam and is still available late in the North American session. At 1.0837, the EUR/USD is up 028%.

Raphael Bostic, the president of the Atlanta Fed, predicted earlier on Monday that if the US central bank starts to lower borrowing costs, there will be one rate decrease in 2024. Lisa Cook echoed some of his remarks, stressing that relaxing policy too soon may exacerbate inflation. Both took a cautious stance. Chicago Fed President Austan Goolsbee, who leans dovish, predicts three rate cuts in 2024 but notes that they must first see proof of a fall in inflation.

US housing data came in lower than anticipated, with new home sales falling 0.3% to 0.662 million, below both January’s 0.664 million and predictions of 0.675 million. In other news, the Chicago Fed reported that all four index categories showed positive changes as the National Activity Index improved, rising from -0.54 to 0.05.

Conversely, consumer confidence in Spain within the Eurozone remained essentially stable, despite statements by Mario Centeno, the head of the European Central Bank (ECB), that inflation has peaked. Inflation in the EU is rapidly approaching its 2% target, according to Fabio Panetta, which allows for rate cuts.

Furthermore, the European Union’s docket will include the GDP report from Spain and Consumer Confidence from Germany. The US economy’s state would be revealed via the S&P/Cas Shiller Home Price Index, CB Consumer Confidence, and Durable Goods Orders.