In the Asian session on Wednesday (May 31), EUR/USD fell slightly, temporarily reporting 1.0730, a drop of 0.01%. Strategist Matthew Ryan said that unless market expectations for ECB interest rates catch up with the reality of rising core inflation, the euro may struggle to break out of its recent trading range against the dollar.
The latest from the European Central Bank:
Ryan also said: “Inflation data for May will be key to guiding these expectations, with ECB President Christine Lagarde’s speech on Thursday and the minutes of the May meeting also released on Thursday, which will be key.” Senior Economics Economist Bert Colijn said that the survey of economic confidence in the euro zone in May increased market concerns about economic growth in the euro zone, and the poor performance of the data showed that the EU economy did not show a strong recovery. The overall sector was weak as services and industry declined. The retail sector saw the biggest decline, which does not bode well for household consumption. Signals of weaker economic growth and a lower outlook for inflation have bolstered market expectations that ECB interest rates are about to peak.
