EURUSD continues at 1.0800, but the prognosis is uncertain due to ECB dovish expectations.

EURUSD fails to extend Friday’s recovery over the immediate resistance of 1.0870, retracing to 1.0850 during Monday’s European session. The major currency pair could fall to its 11-week bottom of 1.0800, established on Thursday, as investors expect the European Central Bank (ECB) to continue lowering interest rates further with Eurozone economic growth slowing and inflationary pressures below the bank’s aim of 2%, investors expect the ECB to slash borrowing rates again in December.

ECB policymaker and Estonian The central bank On Friday, Governor Madis Müller noted that predictions of weak economic growth would likely dampen pricing pressures.

ECB policymaker and Estonian The central bank On Friday, Governor Madis Müller noted that predictions of weak economic growth would likely dampen pricing pressures even further. Market participants’ trust in the ECB’s ability to keep inflation under control increased after the ECB’s own Survey of Professional Forecasters reduced price increases to 1.9% for next year, down from 2% expected a quarter ago.

For more clarity on the interest rate future, investors will pay particular attention to ECB President Christine Lagarde’s two-day speech, which begins on Tuesday. In her press conference following the central bank’s 25 basis point (bps) rate decrease decision on Thursday, Lagarde did not provide a precise interest rate path, saying that choices would be based on incoming data.

Daily Market movers: EURUSD may resume its downward path on US Dollar’s positive outlook.

EURUSD will most likely resume its downward trend. While the US Dollar (USD) projected to prolong its upward trend following a modest technical pullback on Friday. Last week, the US Dollar Index (DXY), which analyzes the value of the US dollar versus six major currencies, reached a new 11-week high near 104.00 due to a number of tailwinds.

The Greenback’s outlook remains positive, as traders believe the Federal Reserve (Fed) will maintain a steady interest rate reduction path. According to the CME FedWatch tool, 30-day Federal Funds futures pricing data reveal that the market expects a 50 basis point (bps) drop in interest rates over the next year, implying that the Fed will decrease borrowing rates by 25 basis points in November and December.

Market expectations For the Fed, choosing for a less aggressive policy.

Market expectations For the Fed, choosing for a less aggressive policy. The easing cycle increased after a deluge of September economic data from the United States (US) showed economic resiliency. Investors will be looking for fresh clues on the economic outlook from the preliminary S&P Global Purchasing Managers’ Index (PMI) data for October, which will be released on Thursday.

Meanwhile, the fate of the US dollar could be exceedingly uncertain as the US presidential elections approach. According to the most recent national polls, Democratic candidate and US Vice President Kamala Harrish leads Republican nominee and former President Donald Trump.