EUR/USD TRADES SIDEWAYS AMID STEADY US DOLLAR DESPITE FIRM FED RATE CUT BETS

• EUR/USD consolidates around 1.0770 as the US Dollar steadies in the aftermath of US data.
• ECB Stournaras sees the central bank reducing interest rates three times this year.
• Weak US labor market data and poor ISM Services PMI darkens the US economic outlook.

EUR/USD strives for a direction, trading sideways around 1.0770 in Monday’s European session. The major currency pair consolidates as the Eurozone economic calendar lacks tier-1 data this week. The European Central Bank (ECB) is widely anticipated to shift to policy normalization in the June meeting. Therefore, speculation about ECB’s stance on interest rates for the second-half of the year will influence the Euro’s move.

ECB policymakers are divided over extending the interest rate-cut cycle after the June meeting. A few policymakers believe that extending rate cuts from the July meeting could revamp price pressures. For the entire year, ECB policymaker and Bank of Greece Governor Yannis Stournaras said in an interview with a Greek media outlet that he sees three rate cuts this year. He sees a rate cut in July as possible and added that the Eurozone’s economic rebound in the first quarter of the year made three cuts more likely than four. The Eurozone economy expanded by 0.3% in the January-March period, beating expectations of 0.1% gain.