EURUSD falls as traders adopt a cautious approach as Middle East tensions rise.
EURUSD fell throughout the European trading session on Monday, reaching about 1.0840. The current risk-off mood, exacerbated by the escalating geopolitical crisis in the Middle East, is causing traders to favor the US dollar (USD), putting negative pressure on the EURUSD pair.
Guindos suggested that policy easing will be considered if inflation meets the central bank’s 2.0% target.
The Euro (EUR) is under pressure following the European Central Bank’s (ECB) interest rate decision on Thursday. The ECB opted to The Main Refinancing Operations Rate remains at 4.50%, as does the Deposit Facility Rate. Furthermore, ECB governing council member Klaas Knot indicated on Sunday. That the central bank must see signs of slower wage growth in the eurozone before considering interest rate reduction.
However, market expectations for ECB rate cuts have risen. With betting on a 50 basis point (bps) reduction in June and a 140 bps cut in December 2024. On the data front, the Eurozone and Germany’s quarterly Gross Domestic Product (GDP) are set to be released on Tuesday.
Vice President Luis de Guindos of the European Central Bank (ECB) has stated that the ECB will consider decreasing interest rates. When there is confidence that inflation will remain within the central bank’s 2.0% target. He Recently, good inflation developments were highlighted. With the ECB indicating that these beneficial trends would eventually be reflected in its monetary policy.
The US Dollar Index (DXY) remains stable at 103.50, with 2-year and 10-year US Treasury rates of 4.33% and 4.11%, respectively. At the time of writing. Investors are betting on the Federal Reserve (Fed) to ease policy as US Core Personal Consumption Expenditures Price Index (PCE) statistics show that inflation is slowing.
Investors gambled on the possibility that the Fed may loosen policy as inflation slows.
Traders are expected to closely examine key economic statistics. Particularly Tuesday’s releases of the US Housing Price Index and Consumer Confidence figures. For further insights into the market. This scrutiny is expected to grow with the imminent statement from the Federal Open Market Committee (FOMC).
