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FX markets are trading with mixed directional conviction as U.S. dollar moves remain driven by upcoming high-impact U.S. data, particularly Retail Sales and the Employment Cost Index (ECI). While the dollar has softened in recent sessions, positioning remains cautious ahead of what is described in the document as the most important U.S. “data dump” since the shutdown. Political developments in Japan and the UK, diverging central bank tones, and commodity-linked dynamics continue to create uneven performance across major pairs.
➡️ EUR/USD is holding above $1.19, trading near its strongest level since late January as the ECB downplays concerns over euro strength.
The ECB kept rates unchanged and reiterated that inflation is on track to stabilise at 2% over the medium term. President Lagarde described the inflation outlook as being in a “good place,” explicitly downplaying the impact of recent euro appreciation. However, she warned that incoming data may remain volatile and should not be interpreted in isolation. Dollar softness ahead of U.S. jobs data has amplified euro gains.
Bottom Line: EUR/USD lacks clear direction ahead of key U.S. wage and consumption data.
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