European Central Bank policymakers appear more hawkish than Federal Reserve talks

Considering the upbeat data, European Central Bank (ECB) Chief Economist Philip Lane signaled in a university lecture in Cyprus that the May decision depends on three factors, namely inflation outlook, underlying dynamic and how quickly these interest rate increases are restricting the economy and bringing down inflation.” The policymaker also said that due to these reasons they haven’t indicated or pre-announced what the expectation is for the next meeting or the upcoming meetings.

On the other hand, St. Louis Federal Reserve President James Bullard said on Thursday he thinks inflation is going to be sticky going forward. 

With the comparatively more hawkish ECB policymaker's tone, the EUR/USD remains firmer ahead of the key data.

Recession woes challenge EUR/USD buyers

It should be noted that the Federal Reserve’s (Fed) preferred gauge of economic health cited the recession woes and put a floor under the EUR/USD prices. “Research from the Fed has argued that the ‘near-term forward spread’ comparing the forward rate on Treasury bills 18 months from now with the current yield on a three-month Treasury bill was the most reliable bond market signal of an imminent economic contraction,” per Reuters.

On the same line are comments from International Monetary Fund (IMF) Managing Director Kristalina Georgieva who said in her prepared remarks on Thursday that she expects the global economy to grow by less than 3% in 2023, down from 3.4% in 2022, per Reuters.

All eyes on United States employment numbers

Given the recently downbeat US employment clues, as well as the hopes of no rate hikes from the Federal Reserve (Fed), today’s US jobs report for March becomes crucial even as the Good Friday holiday is expected to limit the EUR/USD pair’s reaction to data.

Market forecasts suggest a softer print of the headline Nonfarm Payrolls (NFP), to 240K from 311K prior, as well as no change in the Unemployment Rate of 3.6%. However, the mixed expectations for the Average Hourly Earnings make the outcome even more interesting.