A strong US dollar and hawkish Fed statements are putting pressure on the EUR/USD currency pair while the ECB remains dovish.

Due to the fact that most European markets were closed on Monday, trading was modest for the majority of the day, however, flows picked up significantly during the US session. The US Dollar Index (DXY) reached its highest level since April 2020, with a DXY of 100.80.

As investors await Fed Chair Jerome Powell’s final speech before the May monetary policy announcement, the EUR/USD pair is trading below yearly lows of 1.0771.

In recent trading sessions, the pair has been sensitive as the European Central Bank (ECB) kept its policy rates steady. Recognizing the impact of the Ukraine crisis on the eurozone’s inflation and growth rate, the ECB decided to stick to its guns and maintain neutral advice on interest rates.

Second, the EUR/USD pair may continue to decrease due to upcoming Producer Price Index (PPI) data.

The Statistics Office will release it on November 19, 2002. (Friday). PPI will drop to 1.9 percent in October from 2.3 percent in September, according to FXStreet.com.

Price changes in Germany’s key marketplaces are computed. Commodity inflation is measured by changes in the PPI. A high EUR reading indicates bullish sentiment, whereas a low EUR reading indicates pessimistic sentiment (or bearish).

Conclusion

For the second week in a row, the EUR/USD pair fell to a new two-year low of 1.0765 before stabilizing a few points over 1.0800. The primary bearish impetus was the ECB’s decision that it would not modify its monetary policy.