Euro explores further downside against Greenback on Wednesday

The Euro is mixed on Wednesday, sees lopsided gains overall.
Europe saw a slight uptick in final HICP inflation in December.
ECB continues to stamp out rate cut bets, US Fed lets data do the work for them.

The Euro (EUR) saw some gains on Wednesday but still found room to the downside against the US Dollar (USD) as hotter-than-expected US Retail Sales triggered safety flows back into the US Dollar.

Final Core Harmonized Index of Consumer Prices (HICP) from Europe saw a slight uptick in the MoM figure in December but overall printed as expected. European Central Bank (ECB) officials continue to bat down rate cut expectations from money markets. On the US side, Retail Sales climbed much more than investors anticipated in December, leaving rate gamblers in the lurch as swaps trim bets on how many rate cuts the Federal Reserve (Fed) will see in 2024.

Daily digest market movers: Euro sees some gains but declines further against USD

Finalized Core HICP inflation from Europe saw a slight uptick in December MoM, up to 0.5% from the preliminary 0.4%.
Annualized Core HICP inflation held steady at 3.4%.
ECB officials continue to run the circuit of talking down market expectations of ECB rate cuts.
On Wednesday, ECB’s President Lagarde made her first of three appearances at the World Economic Forum in Davos, Switzerland.
ECB President Lagarde didn’t rule out the possibility of a rate cut either before or during the summer season but leaned heavily into “data-dependency” rhetoric, highlighting that Services sector inflation remains near 4%, well above targets.
US Retail Sales figures dominated market flows in the mid-week market session, climbing to 0.6% in December, well above the previous print of 0.3% and beating the forecast of 0.4%.
With retail activity on the rise and the US economy still posting healthy employment figures, market expectations of several rate cuts from the Fed are coming under intense pressure.
Fed swaps have trimmed bets of a March cut from the Fed to just 50%, well down from the peak of 90% in December.