EUR/USD received downward pressure after better-than-expected CPI data.
US Dollar rose on the diminished possibility of a Fed interest rate cut in the March meeting.
Traders factor in the possibility of a rate cut by the Federal Reserve in June.
EUR/USD hovers around 1.0710 during the Asian session on Wednesday, maintaining its position after dropping to three-month lows. The US Dollar (USD) garnered support following the release of robust US inflation data for January, which dampened expectations of an imminent rate cut by the Federal Reserve (Fed) in March.
However, the Euro found some relief from better-than-expected Economic Sentiment data from both the Eurozone and Germany, which were released on Tuesday. Investors are awaiting preliminary Gross Domestic Product (GDP) data scheduled for release on Wednesday. Additionally, market participants will pay attention to a speech by Christine Lagarde, the President of the European Central Bank (ECB), scheduled for Thursday.
Speculation is growing about potential interest rate cuts by the European Central Bank (ECB) at the beginning of the second quarter. ECB Executive Board member Piero Cipollone's comments suggested that there may not be a necessity for the ECB to further constrain demand in its attempts to tackle inflation. This indicates that interest rates may not need to be raised further
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