EUR/USD hovers near 1.0750 during the Asian session on Tuesday after witnessing a plunge in the previous session. The EUR/USD pair tumbled on hawkish remarks from the US Federal Reserve’s (Fed) Chair Jerome Powell, coupled with the improved US ISM Services data.
The US ISM Services PMI recorded a 53.4 reading in January, exceeding the expected figure of 52.0 and the previous month's 50.5. Additionally, the ISM Services Employment Index rose to 50.5 from the previous reading of 43.8.
Federal Reserve Chairman Jerome Powell emphasized the significance of closely monitoring inflation's sustained trajectory toward the 2% core target. This stance resulted in an uptick in US Treasury yields, exerting downward pressure on the EUR/USD pair. The market response reflected increased confidence in the strength of the US Dollar amid indications of a less accommodative monetary policy stance from the Federal Reserve.
Additionally, the Euro (EUR) faced additional downward pressure following the release of weaker Europe’s Producer Price Index (PPI) data on Monday. The European Union (EU) is contending with a disinflationary trend, potentially prompting the European Central Bank (ECB) to consider easing its policy. The Organisation for Economic Co-operation and Development (OECD) foresees inflation across Europe remaining above the ECB's 2% target until sometime after 2025.
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