EUR/USD Movement and Economic Insights

On Wednesday, the EUR/USD pair climbed to about 1.1620 during Asian trading. The U.S. dollar has been on a downward trajectory against the euro this month, largely thanks to remarks from Federal Reserve Chairman Jerome Powell that have bolstered speculation regarding interest rate cuts. Later today, we can expect the release of industrial production data for the Eurozone for August.

In a statement made on Tuesday, Powell highlighted a notable slowdown in employment, indicating heightened risks for the U.S. economy. He implied that the Federal Reserve might implement two more interest rate cuts this year. These dovish comments have weighed on the dollar, providing support for major currency pairs. Many traders are anticipating a 25 basis point cut to a range of 3.75%-4.00% before another cut is expected in December.

The ongoing U.S. government shutdown has pushed back the release of September’s employment data and other economic indicators. The Consumer Price Index (CPI) update is currently set for October 24, just ahead of the Fed’s meeting on October 28-29.

Over in France, Prime Minister Sébastien Lecorne has decided to delay a significant pension reform initially planned for 2023 until after the 2027 presidential election. This move aims to quell the political unrest that has gripped the nation for several months.

Lecorne stated, “This fall, I will propose to Congress that the 2023 pension reform be postponed until the presidential election. There will be no increase in the retirement age until January 2028.” Following his announcement, the euro saw a gradual strengthening against the dollar.

As the day progresses, traders are keenly awaiting speeches from Fed officials, such as Stephen Milan, Christopher Waller, and Jeff Schmidt. If any of them adopt a hawkish tone, it might bolster the dollar, potentially limiting its upside in the near term.