The recent hawkish comments by European Central Bank (ECB) policymakers, suggesting that the central bank shouldn’t rush into a decision to cut interest rates, continue to underpin the shared currency.
ECB President Christine Lagarde told lawmakers that wage pressures remain strong across the region and are anticipated to be an increasingly important driver of inflation dynamics in the coming quarters.
Lagarde added that there are increasing signs of a bottoming-out in growth and some forward-looking indicators point to a pick-up later this year, pushing back market expectations for early interest rate cuts.
The yield on the benchmark 10-year US government bond remains depressed near 4.275%, which is seen undermining the US Dollar and lending additional support to the EUR/USD pair on Tuesday.
A looming recession risk in Germany – the Eurozone's largest economy – keeps a lid on any further gains for the Euro amid expectations that inflation is moving back towards the ECB’s 2% annual target.
The FOMC meeting minutes released last week, along with several Federal Reserve officials, suggested that the US central bank will keep rates higher for longer amid sticky inflation and a resilient economy.
Traders now look to the US macro data – Durable Goods Orders, the Conference Board's Consumer Confidence Index and the Richmond Manufacturing Index – for short-term opportunities on Tuesday.
The focus, however, remains glued to this week's release of the closely-watched flash Eurozone consumer inflation figures and the US Personal Consumption Expenditures (PCE) Price Index
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