The US Dollar (USD) staged a modest rebound on Thursday, ending an eight-day losing streak against major currencies such as the Euro (EUR) and Swiss Franc (CHF) [1][2]. The EUR/USD pair retreated to around 1.1770, down 0.24% on the day, while USD/CHF edged higher to approximately 0.7828, up nearly 0.11% [1][2]. The US Dollar Index (DXY), which measures the Greenback against a basket of six major currencies, recovered to around 98.20–98.25 after touching an intraday low of 97.83, though it remains near six-week lows [1][2].
In the Eurozone, revised inflation data provided support for the single currency. The Harmonized Index of Consumer Prices (HICP) rose by 1.3% MoM in March, up from 0.6% in February and slightly above the preliminary estimate of 1.2%. Annual inflation was revised higher to 2.6%, the highest since July 2024, while core inflation eased to 2.3% YoY from 2.4% [1]. The increase in headline inflation was largely attributed to energy prices, raising expectations that the European Central Bank (ECB) might adopt a more hawkish tone at its April 29-30 meeting [1]. However, ECB officials, including President Christine Lagarde and Bank of France Governor François Villeroy de Galhau, emphasized a cautious approach, stating it is premature to focus on a rate hike at the upcoming meeting [1]. Despite this, markets are nearly fully pricing in a 25-basis-point rate hike by June, with the possibility of another increase later in the year [1].
In Switzerland, inflation risks remain a concern. Swiss National Bank (SNB) President Martin Schlegel highlighted high uncertainty regarding the inflation outlook, noting Switzerland's vulnerability to external shocks and the need for central banks to act decisively if second-round effects emerge [2]. SNB meeting minutes indicated that Swiss inflation is likely to rise in the short term due to higher energy prices but should remain within a range consistent with price stability [2].
US macroeconomic data released Thursday was mixed. Initial Jobless Claims fell to 207,000, beating expectations of 215,000, while Industrial Production declined by 0.5% MoM in March, missing forecasts of a 0.1% increase and reversing the prior 0.7% gain [1][2]. The Philadelphia Fed Manufacturing Survey index improved to 26.7 in April from 18.1 previously, signaling stronger regional manufacturing activity [1]. Federal Reserve Bank of New York President John Williams commented that the Middle East conflict is already contributing to higher inflation and expects US inflation to rise to around 2.75%-3% this year, while maintaining that policy is 'well positioned' [2].
Market participants are closely watching upcoming speeches from ECB officials and developments in US-Iran negotiations, as these could further influence risk sentiment and currency movements [1][2].
CONCLUSION
The US Dollar's rebound after a prolonged decline reflects shifting risk sentiment and mixed economic data, with inflation risks remaining prominent in both the Eurozone and Switzerland. Central banks are signaling caution, but markets anticipate potential tightening later in the year. Investors are now focused on upcoming central bank communications and geopolitical developments for further direction.