Investors remain cautious ahead of Lagarde’s speech and US-China talks, with USD strength driven by rising Treasury yields and inflation concerns.
The Euro traded steady above 1.1700 against the US Dollar on Thursday, down 0.65% for the week. Market focus remains on European Central Bank President Christine Lagarde’s upcoming remarks and the Trump-Xi summit, which could influence risk sentiment and monetary policy expectations.
The US Dollar gained ground this week, supported by safe-haven flows and rising bets on Federal Reserve rate hikes in late 2026 or early 2027. US Producer Price Index data showed a 1.4% rise in April, doubling March’s 0.7% increase, while the year-on-year rate hit 6%, the highest since December 2023. The CME FedWatch Tool now prices a 31% chance of a December rate hike, up from 22% a week ago.
In the Eurozone, Spain’s Harmonised Index of Consumer Prices rose to 3.5% year-on-year in April, up from 3.4% in March, reflecting inflationary pressures tied to the Middle East conflict. The data underscores persistent price risks as markets await further signals from the ECB.