The EUR/USD pair experiences a rally as the Greenback faces significant pressure, currently trading around 1.1800, reflecting a 0.47% increase for the day. Market participants are on the lookout for indications of additional easing measures from the Federal Reserve, with a series of officials expected to make statements throughout the week.
Federal Reserve speakers exhibit a divergence in their outlook, with Bostic, Musalem, and Hammack adopting a hawkish stance, while Miran presents a dovish perspective, suggesting a neutral rate of merely 2%. The Dollar Index has decreased by 0.34% to 97.31, resulting in widespread USD weakness and bolstering the upward momentum of EUR/USD. Market participants are closely monitoring Powell’s speech on Tuesday, along with the Flash PMI data from both the US and Europe, for new insights into market direction.
> Greenback weakens on dovish Fed signals; Euro gains as traders eye PMIs on both sides of the Atlantic : On Monday, Fed policymakers made headlines. Atlanta’s Fed President Raphael Bostic, St. Louis Fed Alberto Musalem, Richmond Fed Thomas Barkin, Cleveland Fed Beth Hammack, and Fed Governor Stephen Miran provided insights prior to Chair Jerome Powell’s speech on Tuesday. Bostic, Musalem, and Hammack are positioned on the hawkish side, whereas Barkin has adopted a neutral stance. On the dovish front lies Miran, who among the comments he made stated that he sees the fed funds rate neutral rate at 2%. The Euro experiences an uplift due to the general weakness of the Dollar, as illustrated by the US Dollar Index. The DXY, which monitors the value of the American currency against six other currencies, has decreased by 0.34% to 97.31. Joachim Nagel, the Bundesbank President and member of the European Central Bank, expressed that he is not concerned about the current valuation of the Euro. In addition to this, attention on both sides of the Atlantic will center on the release of Flash PMIs, as disclosed by S&P Global in the US and by the HCOB in Europe.
Latest FX Rate Trends : EUR/USD disregards hawkish remarks from Federal Reserve officials
- Atlanta Fed President Raphael Bostic expressed to the Wall Street Journal his reservations regarding support for a rate cut in October, citing concerns over inflation risks, while also recognizing the increasing downside risks to employment.
- Alberto Musalem from the St. Louis Fed endorsed the recent rate cut as a precautionary measure to support the labor market, indicating that he would advocate for additional easing should job data deteriorate and inflation expectations remain stable.
- Fed Governor Stephen Miran stated that the policy is “very restrictive,” with projections for the neutral fed funds rate approaching 2%. Thomas Barkin of the Richmond Fed indicated that consumers are bearing slight tariff costs, as economic uncertainty starts to diminish.
- Cleveland Fed’s Beth Hammack highlighted that the Fed is encountering difficulties on both fronts of its mandate, pointing to increased inflation risks. Regarding employment, she characterized the existing environment as a “low-hiring, low-firing” market, with companies reluctant to add to their workforce.
- EU’s Kallas stated that the violation of European air space by Russia on three occasions within two weeks is not coincidental. She emphasized that Russia is testing the limits of European borders and compromising its security, indicating that such provocations will persist if permitted. EU’s Kallas stated that if Russian planes are infringing upon airspace, every nation has the right to protect itself.
- The Kremlin rejected accusations of airspace violations by Russian jets, labeling the assertions as unfounded and intended to heighten tensions.
- In September, Consumer Confidence in the Euro area showed an improvement, rising to -14.9 from August’s -15.5, surpassing estimates of -15.3.
- Futures markets indicate a 90% likelihood of a 25-basis-point Fed rate cut this month, coupled with an approximately 80% chance of an additional quarter-point reduction in December.