EUR/USD is falling towards 1.0600 early Monday as robust March US Retail Sales data bolsters the US Dollar. This key economic indicator exceeded expectations with 0.7% growth, suggesting strong consumer spending and persistent inflation pressure.

Impact on Fed Outlook

Positive retail sales figures support the Federal Reserve’s hawkish stance. Officials have repeatedly emphasized the need to keep interest rates restrictive until inflation convincingly returns to the 2% target. Recent comments from San Francisco Fed President Mary Daly and New York Fed President John Williams reinforce this outlook.

ECB Signals Potential Rate Cuts, Diverging From Fed

In contrast, European Central Bank (ECB) policymaker Peter Kazimir sees the possibility of rate cuts beginning in June, contingent on declining inflation. This statement underscores the divergence in central bank outlooks, putting downward pressure on EUR/USD.

Technical Outlook

While specific technical indicators are not mentioned, the EUR/USD decline suggests near-term bearish bias. Key support lies at the immediate 1.0620 area, with further weakening potentially targeting the 1.0600 level.