- EUR/USD weakens as the ECB may cut interest rates by 25 basis points on key refinancing operations and deposit facilities.
- The dollar index is hovering around 103.35, the two-month high hit on Monday.
- Atlanta Fed President Rafael Bostic expects there will be just one more 25 basis point rate cut in 2024.
EUR/USD remains in position after a four-day losing streak, trading around 1.0890 in Asian trading on Wednesday. The euro could face downward pressure as the European Central Bank (ECB) is widely expected to cut both its main refinancing operations and deposit facility rates by 25 basis points at Thursday's policy meeting.
Traders will be closely monitoring euro zone harmonized consumer price index (HICP) data due to be released on Thursday ahead of the European Central Bank's (ECB) policy decision.
Additionally, the ECB's monetary policy statement and Governor Christine Lagarde's speech at the post-Government press conference will be important closely watched events as they may provide insight into the direction of the ECB's monetary policy. .
The US dollar index (DXY), which measures the value of the US dollar (USD) against six other major currencies, remains near its two-month high of 103.35 hit on Monday. Expectations that the Federal Reserve will ease aggressively in 2024 have faded after strong employment and inflation data released last week.
Markets currently expect a total rate cut of 125 basis points next year. According to the CME FedWatch tool, there is currently a 94.1% chance of a 25 basis point rate cut in November, with no expectations for a larger 50 basis point rate cut.
On Tuesday, Atlanta Fed President Rafael Bostic said he expected only one more 25 basis point rate cut this year, as reflected in the outlook at last month's U.S. central bank meeting. . The median forecast was 50 basis points, higher than the 50 basis points already in place in September, according to Reuters.
