Euro is creeping higher on Tuesday as risk sentiment improves.
The Euro (EUR) is trading slightly higher on Monday, while the US Dollar remains near multi-month lows. The recent dovish tilt by the US Federal Reserve (Fed) and investor anticipation that the US central bank would begin decreasing rates in the first quarter of 2024 are fueling market optimism.
As a result of this positive scenario, the Euro has risen to session highs of 1.0940, up from Monday’s lows of below 1.0900. The market is anticipating the publication of the Consumer Price Index (CPI) statistics for November.
Despite Fed officials’ aggressive language, the US dollar remains at recent lows.
Recent hawkish comments by Fed officials, such as Chicago Fed President Austan Goldsbee, who questioned any commitment to decrease rates soon, have failed to deliver a meaningful boost to the US Dollar. Bond yields in the United States remain near multi-month highs, with traders pricing in rate cuts in March, keeping US Dollar bulls at bay.
Eurozone CPI will provide greater insight into the ECB’s rate plans in a few seconds.
The latest Eurozone CPI report is likely today to confirm that Eurozone inflation continued to fall in November, supporting the idea that the European Central Bank (ECB) has hit its terminal rate.
Market movers for the day: The Euro has taken a mildly optimistic tone ahead of the Eurozone Inflation Report.
The Euro is trading higher on Tuesday, supported by a The market is in a good mood, and the US dollar is down.
Villeroy of the ECB announced the end of rate hikes and predicted that rate cuts would occur sometime in 2024.
The ECB maintained rates on hold last week, with President Lagarde maintaining a hawkish tone in contrast to the Fed’s dovish move, sending the Euro higher against the US Dollar.
Weak Eurozone Q3 GDP and PMI statistics have bolstered the case for an economic downturn, casting doubt on the ECB’s aggressive outlook and raising chances for rate reduction in early 2024.
Crude prices are rising as tensions in the Middle East rise and concerns about oil supply disruptions grow. This might put pressure on the Euro as inflationary pressures rise. of sluggish economic growth.
The US dollar is still weak, and US bonds are falling as futures markets price in a 65% chance of a 25 basis point rate decrease in March 2024.
