• Euro (EUR) awaits fresh catalysts
  • Industrial production data, Christine Lagarde in focus
  • US Dollar (USD) picks up off lows
  • US CPI data expects +0.4% MoM

The Euro US Dollar (EUR/USD) exchange rate is trending lower on Wednesday paring gains from the previous session. The pair settled +0.5% higher in the previous session at US1.2207, just off the high of the day. At 09:15 UTC, EUR/USD trades -0.2% at US$1.2184.

The Euro is edging lower as the common currency trades at the mercy of the US Dollar. There are few fresh catalysts for the Euro. Covid cases on the continent remain high and lockdown restrictions continue to tighten.

On the data front, investors are looking towards industrial production figures due from the bloc. Analysts expect industrial output to increase 0.2% month on month in November, down from a 2.1% monthly increase the previous month.

On a positive note, European Central Bank President Christine Lagarde has said that some uncertainty has cleared. She is due to speak later today.

The US Dollar is trading approximately flat versus its major peers on Wednesday as US treasury yields slipped pulling dragging on the greenback. The US Dollar index, which gauges the US Dollar versus 6 major peers holds steady at 90.13 after rebounding off session lows of 89.92 earlier in the day.

US treasury yields have fallen 7 basis points the 10 month high hit on Tuesday after the US Federal Reserve reiterated that monetary policy will stay accommadative. Expectations had been rising that the Fed could look to tighten policy in the case of huge fiscal stimulus from the Democratic government.

However, Kansas City Fed President Esther George said that she doesn’t expect the Fed to raise rates even if inflation exceeds 2%.

Attention will now turn to US inflation data which is due to be released later today. Expectations are for CPI to increase +0.4% month on month in December, up from +0.2% in November.