Fed currently driving the Euro

The EUR/USD pair trims its intraday gains on Wednesday and faces challenges in extending its winning streak initiated on February 14. The pair experienced upward movement during the Asian session, attributed to a weaker US Dollar (USD) influenced by subdued US Treasury yields. Traders are likely awaiting the release of the Federal Open Market Committee (FOMC) Minutes later in the North American session to gain additional insights into the Federal Reserve's (Fed) position on interest rates.

The Euro receives pressure, possibly due to market caution amidst diminished expectations for early interest rate cuts worldwide. However, China's decision to lower its five-year Loan Prime Rate (LPR) by 25 basis points (bps) to support its economy might provide some support for the Euro, particularly given the close trade ties between China and the Eurozone. Traders are expected to closely monitor the HCOB Purchasing Managers Index (PMI) data from the Eurozone and Germany, slated for release on Thursday.

The US Dollar Index (DXY), which gauges the US Dollar's value against six major currencies, holds steady at around 104.10, while the 2-year and 10-year yields on US Treasury coupons stand at 4.58% and 4.25%, respectively, at the time of writing. The US Federal Reserve is anticipated to uphold elevated policy rates for an extended duration to tackle persistent inflation concerns, especially following last week’s strong consumer and producer prices from the United States (US).