- The EUR/USD is likely to drop as the US dollar maintains its positive momentum on Monday.
- The dollar will strengthen further since Federal Reserve Chairman Powell indicates there’s no urgency to adjust interest rates soon.
- Preliminary consumer confidence in the eurozone for September is projected to be at -15.4, showing a slight rise from -15.5 in the prior reading.
On Monday, the EUR/USD has traded around 1.1730, extending its run over the past four sessions. The currency pair is expected to weaken, with the US dollar gaining strength after last week’s anticipated rate cuts from the Federal Reserve. However, the Fed doesn’t plan to make further reductions in borrowing costs in the immediate future. Traders are likely to keep an eye on eurozone consumer sentiment and any comments from federal officials later today.
During a press briefing post-meeting, Fed Chair Jerome Powell noted signs of labor market softness as a factor in their decision-making. He mentioned that after stabilizing post-December, they felt it was time to lower rates, adding he doesn’t see a need to act swiftly on interest rates. The Fed’s future rate outlook, often referred to as “dot plots,” suggests two additional rate cuts may occur this year.
The EUR/USD pair has been pressured as the euro weakens, especially following a series of demonstrations in major French cities last week. Protesters were urging President Macron and new Prime Minister Recomme to reconsider the spending cuts proposed by former Prime Minister François Byroux.
Mario Centeno, a member of the European Central Bank (ECB), remarked last Friday that additional interest cuts are likely on the horizon. He expressed concerns that if inflation remains problematic, it won’t stay below the 2% target, announcing that the risks to inflation seem to be tilted negatively.
