The EUR/USD pair traded cautiously around 1.0850 during Thursday’s European session, as the U.S. Dollar continued to strengthen and risk sentiment remained soft. The Euro is under pressure ahead of the European Central Bank’s (ECB) upcoming policy announcements.
Daily Chart EURUSD: Published by TRADINGVIEWS
The U.S. Dollar Index (DXY) climbed above 103.50, levels last seen in early August, despite easing U.S. yields across different maturities. The Dollar’s rally has been largely supported by the minutes from the Federal Open Market Committee’s (FOMC) September meeting, where a “substantial majority” of policymakers expressed support for a 50-basis-point rate cut to ease monetary policy, though no clear timeline was given.
Fed officials have also contributed to the cautious tone. While many are inclined toward a 25-basis-point cut in the upcoming policy meeting, dissenting voices such as FOMC Governor Michelle Bowman and Atlanta Fed President Raphael Bostic have hinted that the Fed might hold off on any rate cuts in November. San Francisco Fed President Mary Daly has emphasized that “one or two cuts” may be appropriate given the balanced state of the U.S. economy. Meanwhile, market participants are pricing in a 94% chance of a 25-basis-point cut next month, according to the CME Group’s FedWatch Tool.
ECONOMIC CALENDAR on 17th October 2024
In Europe, the ECB is widely anticipated to lower its rates by 25 basis points at its October 17 meeting. Eurozone inflation, as measured by the Harmonized Index of Consumer Prices (HICP), fell to 1.8% year-over-year in September, below the ECB’s target, alongside stagnant GDP growth, reinforcing the likelihood of further rate cuts.
With both the Federal Reserve and the ECB weighing their next monetary policy moves, the outlook for EUR/USD will largely hinge on macroeconomic trends. The U.S. economy is expected to outperform the Eurozone, potentially adding more upward pressure on the U.S. Dollar.
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