EUR/USD holds its ground in the North American session on Friday, set to wrap up the week with slight gains exceeding 0.18% as traders prepare for the upcoming monetary policy decision from the Federal Reserve. The current trading value for the pair stands at 1.1736, showing little to no movement.
The EUR/USD has seen a weekly increase of 0.18% as traders anticipate a 25-basis point cut from the Fed in September. Signs of trouble loom as weak sentiment, payroll revisions, and climbing jobless claims hint at a downturn in the US labor market just before the FOMC meeting. ECB maintains rates while adopting a flexible approach, as uncertainty in US policy and the ongoing Fed independence drama stir up market fluctuations.
>Euro wraps up the week on a positive note as weak US data strengthens rate cut expectations, bringing policy alignment closer with the ECB : On Friday, the US economic landscape was influenced by fresh data, revealing a decline in Consumer Sentiment for September, alongside inflation expectations that linger above the Fed’s 2% target. The recent payrolls revision on Tuesday, along with a higher-than-expected Initial Jobless Claims report, are the driving factors behind the Fed’s first rate cut in nine months. Investors are buzzing with anticipation as they have completely factored in a 25-basis-point rate cut for the upcoming meeting on September 16-17. The European Central Bank decided to keep rates steady, taking a flexible, data-driven stance without locking into a specific trajectory for interest rates. With the current landscape in mind, the EUR/USD trend leans positively as the interest rate gap between the US and Europe narrows. The split between the two central banks and the weakening labor market in the US may lead investors to flock to the shared currency, viewing it as a safe haven. Exciting developments are unfolding as a DC Circuit has announced a briefing schedule for this weekend. The focus? Whether Governor Lisa Cook can continue her role at the Fed while contesting Trump’s efforts to remove her, as reported by Wall Street Journal journalist Nick Timiraos. Get ready for an exciting week ahead as the US economic calendar highlights the FOMC meeting and Retail Sales! In Europe, all eyes will be on ECB speeches, Eurozone Industrial Production, and the ZEW Survey as investors stay alert for key insights.
Latest FX Rate Trends : EUR/USD Gains Stalled Amid American Economic Pessimism
- Recent findings reveal a decline in American optimism regarding the economy, with the Consumer Sentiment Index falling from 58.2 to 55.4. Inflation expectations for the next year held steady at 4.8%, but for the five-year outlook, there was an increase from 3.5% to 3.9%.
- ECB President Christine Lagarde announced that the disinflationary phase has concluded, emphasized that policy is well-positioned, and noted that the decision to maintain rates was unanimous. Additionally, she noted that trade uncertainty has lessened and that the risks to economic growth are leaning towards the negative side.
- The US Dollar Index, which gauges the greenback’s performance against a selection of six counterparts, has risen by 0.15% to reach 97.64.
- Fitch Ratings Agency anticipates two rate cuts of 25 basis points, scheduled for September and December, with an additional three reductions projected for 2026. On the flip side, the ratings agency anticipates that the
- European Central Bank will not implement any rate cuts in the near future.
- Following the data release, traders anticipated a 90% likelihood of the Fed implementing a 25 basis point policy easing, while a 10% chance was assigned to a 50 basis point cut. The ECB is expected to maintain its current rates, boasting a 93% likelihood, while there’s just a 7% chance of a 25-bps reduction.