- EUR/USD consolidated to around 1.1120 before moving higher as the US Dollar struggled to extend its recovery.
- Fed Chairman Powell's speech will likely provide clues about the size of the rate cut in November.
- The ECB is likely to cut interest rates for the second time in a row in October.
EUR/USD has rebounded to around 1.1150 as investors support the euro (EUR) against the US dollar (USD). The euro has been weak against other major currencies as speculation grows that the European Central Bank (ECB) may cut deposit rates for a second time in a row next month, which would be the third dovish decision by the ECB this year.
“We expect to continue to gradually lower interest rates over the coming days and into the first half of 2025,” ECB Governing Council member Klaas Knot said in an interview with Dutch TV show Nieuw Zoo on Tuesday, suggesting the central bank will continue its easing cycle at 2-3% until at least the first half of 2025.
Growing concerns about the growth of economic activity in the euro area have raised market expectations that the ECB will cut interest rates in October. The euro area composite PMI unexpectedly contracted in September, according to the Flash HCOB PMI report compiled in collaboration with S&P Global.
For any new inflation picture, investors will be watching closely when ECB President Christine Lagarde speaks at 13:30 GMT.
Meanwhile, according to a survey by Growth from Knowledge (GFK), Germany's consumer confidence index improved to -21.2 in October, up from the expected -21.5 and the previously reported -21.9.
Today's Euro Price
The table below shows the percentage change of the Euro (EUR) against the major listed currencies today: The Euro was strongest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | Australian Dollar | NZD | Swiss Franc | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.23% | -0.44% | -0.37% | -0.12% | -0.91% | -0.77% | -0.33% | |
| EUR | 0.23% | -0.21% | -0.16% | 0.10% | -0.68% | -0.54% | -0.11% | |
| GBP | 0.44% | 0.21% | 0.06% | 0.32% | -0.47% | -0.34% | 0.12% | |
| JPY | 0.37% | 0.16% | -0.06% | 0.27% | -0.54% | -0.41% | 0.04% | |
| CAD | 0.12% | -0.10% | -0.32% | -0.27% | -0.78% | -0.64% | -0.20% | |
| Australian Dollar | 0.91% | 0.68% | 0.47% | 0.54% | 0.78% | 0.15% | 0.58% | |
| NZD | 0.77% | 0.54% | 0.34% | 0.41% | 0.64% | -0.15% | 0.44% | |
| Swiss Franc | 0.33% | 0.11% | -0.12% | -0.04% | 0.20% | -0.58% | -0.44% |
The heat map displays the percentage change between major currencies. The base currency is selected from the left column and the quote currency is selected from the top row. For example, if you select Euros from the left column and move along the horizontal line to US Dollars, the percentage change displayed in the box will represent EUR (base)/USD (quote).
Daily Digest Market Trends: US Dollar Recovery Stalls, EUR/USD Rises
- EUR/USD rose slightly in the European session on Thursday after consolidating around 1.1120 on Wednesday. The major currency pair rebounded ahead of the speech of US Federal Reserve Chairman Jerome Powell at 13:20 GMT. As the US Dollar (USD) rebounded on Wednesday, the common pair faced selling pressure after testing the area above the resistance of the 1.1200 round level. The US Dollar Index (DXY), which tracks the value of the US Dollar against six major currencies, is hovering around Wednesday's high of 101.00.
- In addition to Chairman Powell, seven other policymakers are scheduled to speak at the New York session: Boston Fed President Susan Collins, Fed Governor Adriana Kugler, Fed Governor Michelle Bowman, New York Fed President John Williams, Fed Vice Chairman for Supervision Michael Barr, Fed Governor Lisa Cook, and Minneapolis Fed President Neel Kashkari.
- Fed policymakers are expected to give hints about interest rate movements for the rest of the year. The market now expects the Fed to cut interest rates by a total of 75 basis points (bps) over its two remaining meetings, according to the CME FedWatch tool. The tool also indicates that the probability that the Fed will announce two consecutive 50 basis point (bps) rate cuts in November has increased to 61%, up from 39% a week ago.
- Meanwhile, the latest comments from Fed policymakers indicate they are concerned about deteriorating labor market conditions. Only Fed Governor Michelle Bowman of the 12-member Federal Open Market Committee (FOMC) supported starting a gradual rate-cutting cycle with a 25 basis point cut in September.
- For clues on the current state of inflation, investors will be watching U.S. core personal consumption expenditures price index (PCE) data for August, due out on Friday. Underlying inflation is estimated to have grown at a faster pace, at 2.7%, compared with 2.6% in July.
Technical reasons why: EUR/USD rebounds to 1.1150 area
EUR/USD rebounded slightly from 1.1120 in Thursday’s European trading session. The major currency pair corrected from the key resistance at 1.1200 on Wednesday. The short-term outlook for the shared currency pair remains firm as it maintains a breakout of an ascending channel chart pattern formed on the daily chart near the psychological support of 1.1000.
The upward sloping 20-day exponential moving average (EMA) near the 1.1100 level suggests that the short-term trend is bullish.
The 14-day Relative Strength Index (RSI) is trading below 60.00, suggesting weakening momentum.
On the upside, a decisive breakout above the 1.1200 round level resistance would signal a further rise towards the July 2023 high of 1.1276. On the downside, the psychological level of 1.1000 and the July 17 high around 1.0950 would be key support zones.
