ECB officials' hawkish remarks on the first day of the ECB forum caused the euro to surge and the dollar to weaken slightly.

Market participants eagerly await statements from officials of the world's most influential central bank at the ECB Forum on Central Banking in Sintra, Portugal. The US Dollar Index (DXY) remained flat during early trading in the European session on Wednesday (June 28), reflecting a cautious "wait-and-see" sentiment.

USD Index

Yesterday (June 27), during the New York session, some US economic data exceeded market expectations. Durable Goods Orders, Building Permits, and New Home Sales rebounded in May 2023, showing positive growth at a faster pace. Additionally, the June 2023 survey by The Conference Board revealed a significant increase in US Consumer Confidence from 102.5 to 109.7.

These data support expectations of further interest rate hikes by the Federal Reserve (Fed) at the July FOMC meeting while reducing concerns about a potential recession. However, according to CME's FedWatch data, the market anticipates only one more interest rate increase this year, with no further tightening after July. Consequently, the US dollar lacked the momentum to rally.

Rodrigo Catril, senior strategist at National Australia Bank, explained to Reuters that the US data suggests "sectoral recessions" are occurring at different rates, complicating the Fed's efforts to control inflation, necessitating higher interest rates.

The ECB Forum in Sintra, which began yesterday, has captured the attention of market participants. On the first day, several ECB officials made hawkish statements, resulting in the EUR/USD pair rising by more than 0.5% and surpassing the 1.0950 threshold.

The second day of the forum will feature a panel discussion with key central bank leaders in attendance. This includes Fed Chair Jerome Powell, Bank of England (BOE) Governor Andrew Bailey, ECB President Christine Lagarde, and Bank of Japan (BOJ) Governor Kazuo Ueda.