The EUR/USD gave away part of its initial bull run, dropping to 1.0670 after a strong start to the day. The euro had initially been supported by the EMU Final Inflation Rate, which rose 0.9% MoM and 8.5% YoY in February.
However, the pair struggled to maintain its momentum as the US Consumer Sentiment worsened in March. The decline in consumer sentiment was likely driven by concerns over the ongoing coronavirus outbreak and its impact on the US economy.
EMU Final Inflation Rate Rises in February
The EMU Final Inflation Rate rose 0.9% MoM and 8.5% YoY in February, providing some support for the euro. The increase in inflation was driven by higher energy prices and a rebound in food prices, which had been impacted by the coronavirus outbreak.
The rise in inflation is likely to be welcomed by the European Central Bank, which has been struggling to meet its inflation target of 2%. However, it remains to be seen whether the increase in inflation will be sustained over the longer term.
US Advanced Consumer Sentiment Worsens in March
The US Advanced Consumer Sentiment worsened to 63.4 in March, down from 76.8 in February. The decline in consumer sentiment was likely driven by concerns over the ongoing coronavirus outbreak and its impact on the US economy.
The decrease in consumer sentiment is likely to be a cause for concern for policymakers, as it could lead to lower consumer spending and slower economic growth. The Federal Reserve has already taken steps to support the economy, cutting interest rates to near zero and implementing a range of other measures to support the financial system.
Conclusion
In conclusion, the EUR/USD retreated from its initial bull run as US Consumer Sentiment worsened in March. The euro had initially been supported by the EMU Final Inflation Rate, which rose in February. However, concerns over the impact of the coronavirus outbreak on the US economy have put pressure on the US dollar.
While the rise in inflation in the Eurozone is likely to be welcomed by the European Central Bank, the longer-term impact remains uncertain. Meanwhile, the decline in US Consumer Sentiment is likely to be a cause for concern for policymakers, who are already taking steps to support the economy.
