EUR/USD declines to approximately 1.1785 during the early Asian session on Thursday. Multiple officials from the Federal Reserve indicated that additional tightening could be necessary should inflation remain persistent. There are indications that Lagarde of the ECB might step down prior to the completion of her term. The EUR/USD pair declines to a near two-week low, hovering around 1.1785 in the early Asian session on Thursday. The US Dollar shows strength against the Euro following hawkish FOMC minutes, which have reignited speculation regarding possible interest rate increases should inflation continue to be high.
The FOMC Minutes from the January policy meeting indicate that nearly all participants supported maintaining current rates, with only a few advocating for a reduction. Policymakers have left the possibility open for additional reductions should inflation decrease as anticipated. Concurrently, Fed officials indicated their support for framing future decisions in a manner that reflects both sides of the equation. It was proposed by several members that increases in interest rates might be required should inflationary pressures continue.
According to the source, it appears that European Central Bank President Christine Lagarde might resign from her role sooner than her intended retirement date of October 2027. A source indicated that Lagarde aims to allow French President Emmanuel Macron and German Chancellor Friedrich Merz to identify her successor, though there was no indication of her potential departure date.
Market participants will pay careful attention to the upcoming preliminary Purchasing Managers’ Index readings from Germany and the Eurozone, set to be released on Friday. Should outcomes exceed expectations, this could potentially mitigate the losses of the shared currency in the short term.