Euro sits at 3 month low

The EUR/USD pair grapples to rebound from three-month lows on Wednesday. However, the Euro (EUR) faces challenges after the release of the seasonally adjusted Eurozone Gross Domestic Product (GDP) data, which showed consistency by meeting the market expectations for the fourth quarter, which weakens the Euro, consequently, undermining the EUR/USD pair. Furthermore, the higher-than-expected US Inflation has shifted market sentiment toward no interest rate adjustment by the Federal Reserve (Fed) in the upcoming March meeting. This has provided upward support for the US Dollar (USD) against the Euro (EUR).

The Euro experienced a moment of respite following the release of better-than-expected Economic Sentiment data from both the Eurozone and Germany on Tuesday. Investors are now eagerly awaiting preliminary Gross Domestic Product (GDP) data slated for release on Wednesday. Furthermore, market participants are keenly paying attention to a scheduled speech by Christine Lagarde, the President of the European Central Bank (ECB), on Thursday.

The US Dollar Index (DXY) rebounds from intraday losses and continues to extend gains despite downbeat US Treasury yields. Market sentiment has undergone a significant shift, with expectations for an unchanged interest rate next month soaring to near 90%, a marked difference from just a month ago. Investors are now contemplating the possibility of a rate cut by the Federal Reserve (Fed) in June.