Key events today:

11:30 UTC: EUR – Retail Sales Volume Change.

The EUR/USD pair remains stable around 1.0880 during Asian trading hours, while the US dollar (USD) holds firm ahead of Monday’s retail sales data release. However, the dollar faced headwinds after the University of Michigan (UoM) reported on Friday that the preliminary Consumer Sentiment Index for March dropped to 57.9—the lowest level since November 2022—compared to the previous reading of 64.7. This figure also fell short of the consensus forecast of 63.1.

Markets widely expect the Federal Reserve (Fed) to maintain its current policy stance when it concludes its two-day meeting on Wednesday. According to the CME FedWatch tool, traders assess a nearly 75% probability of a quarter-point rate cut by June.

The euro (EUR) strengthened following reports that Germany reached an agreement on revising debt obligations and significantly increasing public spending. Friedrich Merz, the incoming chancellor, secured a deal with the Green and Social Democratic parties on Friday, ahead of a crucial parliamentary vote on Tuesday regarding borrowing rule reforms. If the proposal gains a two-thirds majority, the increased spending plan could have a significant impact on the EUR/USD pair.

Meanwhile, European Central Bank (ECB) Vice President Luis de Guindos expressed concerns on Sunday, stating that President Trump’s policies create greater economic uncertainty than the COVID-19 crisis, Bloomberg reported. Guindos noted that the new US administration appears less inclined toward a multilateral approach that fosters cross-jurisdictional cooperation to address global challenges, calling this shift one of the main sources of instability.

Additionally, ECB Governing Council member and Bank of France Governor François Villeroy de Galhau emphasized the need for the euro to play a more prominent role on the global stage. In an interview with La Tribune Dimanche published over the weekend, de Galhau urged the creation of a “strong savings and investment union” to attract international investors to the euro.

Recommendation: SELL 1.0880, SL 1.0930, TP 1.0770.