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Dollar Holds Strong as June Rate Cut Expectations Wane; ECB to be Non-Event

Dollar remains firm in Asian session after the strong post-CPI rally. US stocks were deeply sold off as a June Fed rate cut is further priced out by the markets. Market attention is now keenly focused on the upcoming PPI for March, as well as University of Michigan's consumer survey results. Should today's PPI data reveal strong figures, followed by heightened consumer inflation expectations tomorrow, it could further delay the Fed's anticipated rate reduction timeline, thereby reinforcing the Dollar's strength.

Euro Declines After ECB Opens Door for Rate Cuts, Dollar Eases Following PPI Data

Euro weakens broadly following ECB's decision to maintain interest rates unchanged, coupled with explicit suggestions of a potential rate cut ahead. However, selloff has been relatively mild, primarily because ECB's statement didn't serve as a definitive pre-announcement of rate cuts, unlike its 2022 guidance on rate hike. Moreover, the conditional guidance regarding future rate adjustments had been largely anticipated, given previous communications from ECB officials. Still, risk is now mildly on the downside for the common currency, especially in crosses.

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