EURUSD under selling pressure after the flash Eurozone annual headline HICP came in at 1.8%, lower than expectations of 1.9% in September.

EURUSD remains under pressure, but the US Dollar (USD) recovers after traders reduce Federal Reserve (Fed) significant rate cut bets for November. The US Dollar Index (DXY), which measures the Greenback’s value against six major currencies, rises beyond 101.00. According to the CME FedWatch tool, 30-day Federal Fund futures price data suggests that the possibility of the Fed cutting interest rates by 50 basis points in November has declined to 35.3% from 58% one week ago.

Fed Chair Jerome Powell’s comments at the National Association for Business Economics conference on Monday, which indicated that the central bank will drop key rates by a quarter-to-a-percentage point in both remaining meetings this year, quelled market anticipation about large interest rate reduction. Powell stated: “If the economy evolves as expected, that would be two more cuts by year’s end, for a total reduction of half a percentage point more” , per Reuters.

Investors are waiting for US job market statistics to provide new interest rate advice.

On the contrary, Atlanta Fed President Raphael Bostic supports a 50-basis-point interest rate drop for the second time in a row if labor market data deteriorate unexpectedly. For fresh insights into the current labor market health, investors focus on the United States’ (US) ADP Employment Change and the Nonfarm Payroll (NFP) figures for September will be release on Wednesday and Friday.

The US Dollar influenced in Tuesday’s New York session by the September US ISM Manufacturing Purchasing Managers Index (PMI) and the August JOLTS Job Openings data, both of which will be release at 14:00 GMT.

Daily Market movers: EURUSD falls as soft Eurozone HICP surges ECB rate cut forecasts

The EURUSD fell below the round-level support of 1.1100 during Tuesday’s European session. The major currency pair falls due to additional deceleration in the preliminary annual Eurozone headline Harmonized Index of Consumer Prices (HICP) below the European Central Bank’s (ECB) target of 2%, fueling market speculation that the ECB will slash interest rates again in October.

This report indicated that annual headline HICP inflation fell faster than expected to 1.8%, down from 1.9% projections and 2.2% in August. The core HICP, which excludes volatile goods like as food, energy, alcohol, and tobacco, increased by 2.7%, slower than expected and lower than the 2.8% reading from August. The monthly headline HICP fell by 0.1% in September, but the core HICP increased at a similar rate.

ECB widely expected to lower interest rates again in October.

In September, the ECB slashed interest rates for the second time in its current policy easing cycle, and another cut is predicted in October. The return of the annual HICP below 2% is not the only factor driving a rise in ECB rate cut bets. The Old Continent is underperforming on a variety of factors, including the labor market. and overall economic activity. As a result, additional rate cuts are required to stimulate the economy.

ECB President Christine Lagarde stated on Monday during a European Union parliamentary session in Brussels that “some survey indicators suggest that the recovery is facing headwinds.” “The latest developments strengthen our confidence that inflation will return to target in a timely manner,” however “we will take that into account in our next monetary policy meeting in October,” according to her.