The EUR/USD Pair: Market Analysis for Thursday
- EUR/USD attracts fresh sellers on Thursday amid a modest USD strength.
- Bets for smaller Fed rate cuts and elevated US bond yields benefit the USD.
- Diminishing odds for aggressive ECB easing could limit losses for the pair.
Market Movement
The EUR/USD pair faced selling pressure during the Asian session on Thursday, pulling back from its recent gains to the 1.0870 area, a one-and-half-week top. This downward movement was driven by a resurgence in US Dollar (USD) buying, pushing prices below the mid-1.0800s in the last hour.
Factors Influencing the Market
Several key factors are influencing the market movements:
- The US economy continues to show strength, with recent data indicating strong job growth and solid economic expansion.
- Expectations for smaller rate cuts by the Federal Reserve (Fed) are boosting the USD, as investors anticipate a more conservative approach to monetary policy.
- In contrast, concerns about the European Central Bank (ECB) implementing aggressive easing measures have lessened, leading to a potential support for the Euro.
Key Data Points
Recent data releases and upcoming events to watch include:
- The US Bureau of Economic Analysis reported a 2.8% annualized growth rate for the US economy in the second quarter, supporting the case for smaller rate cuts by the Fed.
- German economic data showed unexpected growth in the third quarter, influencing expectations for ECB policy decisions.
- The US Personal Consumption Expenditure (PCE) Price Index will provide insights into the Fed’s interest rate outlook and drive US bond yields.
Market Outlook
The broader risk sentiment and upcoming economic indicators will play a crucial role in determining short-term trading opportunities around the EUR/USD pair. Watch for fluctuations in the USD and Euro based on the evolving economic landscape.
Economic Indicator: Core Harmonized Index of Consumer Prices (YoY)
The Core Harmonized Index of Consumer Prices (HICP) measures changes in the prices of goods and services in the European Monetary Union. This indicator, released by Eurostat on a monthly basis, provides insights into inflation trends and purchasing patterns. A high reading is bullish for the Euro (EUR), while a low reading is bearish.
- Next release: Thu Oct 31, 2024 10:00 (Prel)
- Consensus: 2.6%
- Previous: 2.7%