EUR/USD Continues Losing Streak
The EUR/USD currency pair extended its decline on Thursday, marking five consecutive days of losses. During European trading, it slipped to around 1.1500, which is its lowest point in nearly two weeks. This drop can largely be attributed to the dollar’s strength as it continues to outperform other currencies, especially as hopes for an interest rate cut by the Federal Reserve in December begin to fade.
At this moment, the U.S. Dollar Index (DXY), which measures the dollar against six major currencies, is positioned around 100.30, reaching a level not seen in almost five months.
The chances of the Fed lowering interest rates by 25 basis points to a range of 3.50-3.75% at the upcoming December meeting have dropped to 32.8%, down from 50.1% earlier in the week, according to the CME FedWatch tool.
Traders seem to have dismissed the Fed’s previously dovish stance following the release of the Federal Open Market Committee’s minutes from their October meeting. Those minutes revealed that a number of policymakers are in favor of keeping interest rates steady in December, citing concerns that further easing could anchor consumer inflation expectations.
Investors are now looking ahead to the release of the U.S. non-farm payrolls (NFP) data for September, which is set to come out at 13:30 GMT. This information could significantly influence expectations regarding the Fed’s future interest rate policies, with several officials noting potential downside risks to the labor market.
Meanwhile, the euro is facing some pressure as investors’ appetite for risk diminishes amidst the fading dovish expectations from the Fed.
In the coming days, the euro’s movements may also be shaped by the preliminary HCOB Purchasing Managers Index (PMI) for November, which is expected to be released on Friday.
Upcoming Economic Indicators
Non-Farm Payrolls Data
The Non-Farm Payrolls report provides insight into the number of new jobs created in the U.S. across all non-farm sectors for the previous month. Released by the U.S. Bureau of Labor Statistics (BLS), this data can be quite volatile, and revisions to previous months can further influence market reactions. Generally, figures that show higher job creation tend to be bullish for the dollar, while lower numbers may be seen as bearish. So, how the market interprets the overall BLS report will play a key role in shaping expectations moving forward.
