EUR/USD experiences a rebound, reaching approximately 1.1720 during the early Asian session on Thursday. The European Central Bank is anticipated to increase its deposit rate in the upcoming month, as indicated. In April, the US Producer Price Index experienced a year-over-year increase of 6.0%, surpassing expectations. The EUR/USD pair regains some of its previous losses, approaching 1.1720 in the early hours of the Asian session on Thursday. The Euro edges higher against the US Dollar on hawkish signals from European Central Bank officials.
Market participants will closely analyze the forthcoming US Retail Sales report for April, scheduled for release later on Thursday. ECB policymaker Joachim Nagel stated on Wednesday that the likelihood of the central bank needing to increase borrowing costs as a result of the Iran war is increasing. Meanwhile, Philip Lane contended that officials must meticulously analyze the repercussions on growth and inflation prior to reaching a decision, emphasizing that establishing the suitable monetary policy stance is inherently a matter of judgment.
A significant majority of economists, approximately 85%, anticipated that the ECB would increase its deposit rate by 25 basis points to 2.25% in June. This marks a notable shift from just over half of respondents who held that expectation prior to the April meeting, as indicated by a poll. Conversely, the US Bureau of Labor Statistics reported on Wednesday the most significant wholesale inflation figure since late 2022, with the Producer Price Index increasing by 6.0% year-over-year in April.
This reading succeeded the 4.3% recorded in March and exceeded the market consensus of 4.9%. In April, the PPI inflation experienced an increase to 1.4%, up from 0.7% in March, significantly surpassing the expected rate of 0.5%. Stronger-than-anticipated US PPI inflation figures could potentially mitigate the recent depreciation of the Greenback in the short run.