EUR/USD Struggles as US Dollar Gains Strength
- EUR/USD fails to maintain position above 1.0950 amidst strong US Dollar performance.
- Fed large rate cut bets for November have been priced out by traders.
- ECB expected to reduce interest rates by 50 bps in the last quarter of the year.
In Wednesday’s European session, EUR/USD hovers near the eight-week low of 1.0950 as the US Dollar (USD) continues to strengthen. The US Dollar Index (DXY) is near a seven-week high around 102.60, contributing to the pressure on the major currency pair.
Factors Affecting EUR/USD Movement:
- Traders have adjusted expectations for the Federal Reserve (Fed) to cut interest rates by 50 basis points (bps) in November, following positive US Nonfarm Payrolls (NFP) data for September.
- Dismal market sentiment due to Middle East tensions has increased the US Dollar’s appeal as a safe haven asset.
- Financial markets anticipate a 25 bps interest rate cut by the Fed in the remaining policy meetings this year.
Upcoming Events Impacting USD:
Investors will closely monitor the release of the Federal Open Market Committee (FOMC) Minutes from the September meeting at 18:00 GMT. This will provide insights into interest rate decisions and economic outlook.
US Consumer Price Index (CPI) and Producer Price Index (PPI) data for September, scheduled for Thursday and Friday respectively, will be crucial for the US Dollar’s movement.
Market Movers: ECB’s Rate Cut Expectations
- The Euro (EUR) faces selling pressure as the European Central Bank (ECB) is anticipated to cut interest rates by 50 bps by the year-end.
- Market expectations for further rate cuts by the ECB stem from declining price pressures and economic vulnerabilities in the Eurozone.
- ECB Governor Yannis Stournaras supports additional rate cuts in the upcoming policy meetings to address inflation challenges.
Technical Analysis: EUR/USD Forecast
EUR/USD struggles near the key support level of 1.0950, following a breakdown of the Double Top chart pattern on the daily timeframe. The 14-day Relative Strength Index (RSI) indicates potential weakness ahead for the currency pair.
Key levels to watch:
- Support: 200-day EMA at 1.0900
- Resistance: 20-day EMA at 1.1090, September high at 1.1200
Euro FAQs
Here are some frequently asked questions about the Euro:
- What is the Euro?
- Who controls monetary policy in the Eurozone?
- What economic indicators affect the Euro?
- How does the Trade Balance impact the Euro?
For more information on the Euro, visit the European Central Bank’s official website.