EURUSD rises after correcting to approximately 1.1120 as the US dollar fails to prolong its comeback.
EURUSD is marginally higher in Thursday’s European session after correcting to roughly 1.1120 on Wednesday.
Fed Powell’s speech will provide clues as to the extent of the probable interest rate cut in November.
The major currency pair recovers ahead of US Federal Reserve Chair Jerome Powell’s address at 13:20 GMT. On Wednesday, the shared currency pair encountered selling pressure after testing above the round-level resistance of 1.1200, as the US Dollar (USD) recovered. The US Dollar Index (DXY), which analyzes the value of the greenback versus six major currencies, remains near Wednesday’s The high is around 101.00.
In addition to Powell, seven other policymakers are scheduled to speak during the New York session: Boston Fed President Susan Collins, Fed Governor Adriana Kugler, Fed Governor Michelle Bowman, New York Fed President John Williams, Fed Vice Chair for Supervision Michael Barr, Fed Governor Lisa Cook, and Minneapolis Fed President Neel Kashkari.
Fed policymakers are expected to provide indications of future interest rate action. According to the CME FedWatch tool, markets currently expect the Fed to decrease interest rates by 75 basis points (bps) during the next two meetings. The program also displays the chance of the Fed announcing a second straight interest rate drop by 50 percent Basis points (bps) in November jumped to 61% from 39% a week earlier.
Meanwhile, recent comments from Fed policymakers show that they are concerned about weakening labor market conditions. Out of the 12 members of the Federal Open Market Committee (FOMC), only Fed Governor Michelle Bowman favored progressively beginning the rate-reduction cycle with a 25 basis point rate decrease in September.
Investors will look to the United States’ (US) core Personal Consumption Expenditures Price Index (PCE) data for August.
Investors will look to the United States’ (US) core Personal Consumption Expenditures Price Index (PCE) data for August, which will be release on Friday, for clues about current inflation levels. The underlying inflation data expected to have increased at a quicker rate of 2.7%, compared to 2.6% in July.
Daily Market movers: EURUSD climbs despite worry about the Eurozone’s fate.
EURUSD rises to approximately 1.1150 as speculators support the Euro (EUR) versus the US dollar. The Euro’s performance against other major currencies is lackluster, owing to mounting anticipation that the European Central Bank (ECB) may decrease the Rate on Deposit Facility for the second time in a row next month. This would mark the ECB’s third dovish decision this year.
On Tuesday, the comments of Dutch ECB governing council member Klaas Knot in an interview with the Dutch TV program Nieuwsuur indicated that the central bank will continue the policy-easing cycle to at least the first half of 2025 at a level between 2% and 3%, saying, “I would expect us to continue to gradually reduce interest rates in the coming Also, in the first part of 2025.”
European Central Bank may decrease interest rates for the second time in a row.
Market expectations for the ECB to cut interest rates in October have been fuel by growing concerns about the Eurozone’s economic growth. The Eurozone Composite PMI unexpectedly contracted in September, according to the flash HCOB PMI data compiled with S&P Global.
Investors will be looking for new inflation data from the preliminary German Harmonized Index of Consumer Prices (HICP) for September, which will be release on Monday. Signs of a further downturn in inflationary pressures would lead to market expectations of a 50 basis point interest rate drop from the ECB, but hot statistics would undermine them.
Meanwhile, a study from Growth From Knowledge (GFK) showed on Thursday that German consumer confidence improved to -21.2 in October compared to estimates of -21.5 versus the previous release of -21.9.
