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EUR/USD Slumps Below 1.0800 on Dovish ECB Commentary, Robust US Data

The Euro extended losses against the US Dollar, sinking below 1.0800 following dovish signals from European Central Bank (ECB) policymaker Francois Villeroy. EUR/USD currently trades at 1.0787, registering a 0.37% loss.

Villeroy’s remarks suggesting a rapid core inflation decline while acknowledging risks surrounding potential ECB rate cuts fueled selling pressure. Concurrently, weaker-than-expected German Retail Sales figures added to the Euro’s woes.

Robust US economic data bolstered the Dollar. Positive revisions to Q4 2023 GDP, persistently low jobless claims highlighting a tight labor market, surging consumer sentiment according to the University of Michigan, and a surprise uptick in Pending Home Sales all contributed to bullish USD sentiment.

Hawkish commentary from Federal Reserve Governor Christopher Waller further strengthened the Dollar ahead of Friday’s Core Personal Consumption Expenditures (PCE) price index release.

The EUR/USD pair, now trading below its 200-day moving average (DMA), has breached the February 29 low of 1.0794 and targets the 1.0780 area. A sustained close below 1.0800 could trigger a further slide towards the February 14 low of 1.0694, with 1.0600 as the next potential target.