Oct 18, 2022
VOT Research Desk
On the opening day of a new week, the EUR/USD pair sees some purchasing with a little decline in the value of the US dollar, but the increase lacks positive confidence.
The risk-on drive and a little decline in US Treasury bond rates end up being the main factors weakening the safe-haven dollar. The UK government is reportedly planning for a significant U-turn on promised tax cuts, according to sources, which boosts the risk sentiment.
However, mounting concerns over a deepening global economic slowdown should restrain any upbeat market movement. Investors are nonetheless worried about potential economic challenges brought on by geopolitical risk and quickly rising borrowing prices. Furthermore, concerns about a recession have been heightened by China’s zero COVID-19 policy.
In addition, the likelihood of a more aggressive tightening of policy by the Fed continues to support the dollar and support a lid on the EUR/USD pair.
The markets are pricing in an almost 100% possibility of another massive 75 basis point rise in November because they are persuaded that the Fed would raise interest rates at a quicker clip to combat inflation. The higher US CPI figure issued last week and subsequent hawkish remarks by numerous Fed officials confirmed the wagers. As a result, the USD bulls are favored, and it is possible that the major will move down along the path of least resistance.
Traders are now looking for a new impetus in the US economic calendar, which includes the release of the Empire State Manufacturing Index.
The USD price dynamics and the EUR/USD pair will be somewhat influenced by the US macro data, US bond rates, and overall risk sentiment. But the fundamental landscape continues to be heavily skewed in the direction of pessimistic traders. Therefore, any intraday uptick might still be viewed as a buying opportunity and could fizzle out quite rapidly.
