EUR/USD falls near 1.0770 as ECB officials hint at possible rate cut in June

• EUR/USD continues to lose ground due to dovish comments from ECB members.
• German retail sales fell 1.9% month-on-month and 2.7% year-on-year in February.
• Investors await the US PCE figures to better understand the path of the Fed's interest rates.

He EUR/USD remains around 1.0770 during the European session on Friday, extending losses for the fourth consecutive day. However, trading volume is low due to the Good Friday holiday. The Euro faces downward pressure as European Central Bank (ECB) officials increasingly suggest a likely interest rate cut in June.

Besides, The Euro was pressured downwards after the retail sales data in Germany, which were weaker than expected. The monthly report revealed a 1.9% decline in German retail sales in February, against expectations of a 0.3% increase after a previous decline of 0.4%. In addition, retail sales fell 2.7% year-on-year, exceeding the expected decline of 0.8% and the previous 1.4%.

Yannis Stoumaras declared on Tuesday that there is a growing consensus at the ECB for a rate cut in June. The head of economic policy at the ECB, François Villeroy de Galhau, noted a rapid decline in core inflation, although it remains high. He indicated that reaching the ECB's inflation target of 2% is feasible, but warned of growing downside risks if the ECB opts not to cut rates. Furthermore, Fabio Panetta, member of the Executive Board of the ECB, stressed that restrictive policies are slowing down demand and causing a rapid decline in inflation.

The US Dollar Index DXY strengthens, approaching 104.60, as recent data indicates an economic expansion in the United States (US), driven by consumer spending. In the fourth quarter of 2023, the annualized US Gross Domestic Product (GDP) expanded by 3.4%, exceeding market expectations of remaining unchanged at an increase of 3.2%. US Underlying Personal Consumption Expenditure (quarter-on-quarter) for the same period stood at 2.0%, slightly below the previous expected reading of 2.1%.

Hardline statements from a Federal Reserve (Fed) official strengthened the dollar. The statements of the Governor of the Fed, Christopher Waller on Wednesday hinted at a possible postponement of interest rate cuts given solid inflation figures. Investors now await Friday's US personal consumption expenditure (PCE) report, which serves as the Fed's preferred inflation gauge, for more information and guidance on US interest rates.