EUR/USD holds ground below 1.0900 ahead of US Retail Sales data

• EUR/USD may find support from improving risk sentiment amid a potential ceasefire discussion between Trump and Putin this week.
• The US Dollar remains steady as traders exercise caution before the upcoming Retail Sales data release.
• The Euro strengthened after Germany agreed on a debt overhaul and a significant increase in state spending.

EUR/USD remains steady around 1.0880 during Asian trading hours, with the US Dollar (USD) holding firm ahead of Monday's Retail Sales data release. However, the Greenback faced headwinds after the University of Michigan (UoM) reported a decline in its preliminary Consumer Sentiment Index for March on Friday, falling to 57.9--the lowest since November 2022--from the previous reading of 64.7. This figure also came in below the consensus estimate of 63.1.

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

The EUR/USD pair could gain support from improving risk sentiment amid reports of a potential ceasefire discussion between US President Donald Trump and Russian President Vladimir Putin this week. Trump's envoy, Steve Witkoff, stated on Sunday that he expects the two leaders to speak, adding that Putin "accepts the philosophy" of Trump's ceasefire and peace terms, according to The Guardian. Last week, the US and Ukraine proposed a 30-day ceasefire to Russia, with Putin expressing support for the initiative.

The Euro (EUR) strengthened following news that Germany had reached an agreement on a debt overhaul and a substantial increase in state spending. Friedrich Merz, the incoming chancellor, secured a deal with the Green and Social Democrat parties on Friday, ahead of a crucial parliamentary vote on Tuesday to reform borrowing rules. If the proposal garners a two-thirds majority, the increased spending plan could provide a significant boost to the EUR/USD pair.

Meanwhile, European Central Bank (ECB) Vice President Luis de Guindos expressed concerns on Sunday, stating that President Trump's policies are generating greater economic uncertainty than during the COVID-19 crisis, according to Bloomberg. Guindos noted that the new US administration appears less inclined toward multilateralism, which fosters cooperation across jurisdictions to address global challenges--a shift that he described as a major source of instability.

Additionally, ECB Governing Council member and Banque de 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 over the weekend, Galhau called for the creation of a "powerful savings and investment union" to attract international investors to the Euro.