EUR/USD declines on Friday during the latter part of the North American session, as the Greenback strengthens following a rebound from three-year lows that were hit after the Federal Reserve’s interest rate cut. The political unrest in France, coupled with rising US Treasury yields, has strengthened the US Dollar, resulting in a decline in the pair.
The US Dollar rebounds from three-year lows following the Fed’s rate cut, bolstered by an increase in US Treasury yields towards the end of the week. Fed officials Daly and Kashkari expressed a measured outlook, whereas Miran reiterated his inclination towards more substantial easing. Protests against spending cuts in France are intensifying pressure on Macron’s new Prime Minister, creating additional political challenges for the Euro.
> EUR/USD declines as Federal Reserve representatives, rising yields, and unrest in France hinder the Euro’s upward trajectory : The EUR/USD is currently at 1.1747, reflecting a decrease of 0.32%, as the economic calendar remains sparse on both sides of the Atlantic. Comments from Fed officials following the central bank’s decision to lower rates by 25 bps last Wednesday indicate that the prevailing position of most members of the Federal Open Market Committee is neutral, with the exception of Fed Governor Stephen Miran. The US economic docket included remarks from San Francisco Fed President Mary Daly, Minneapolis Fed President Neel Kashkari, and Governor Miran. Daly’s communication exhibited a slightly dovish stance, whereas Kashkari maintained a neutral tone, even suggesting the possibility of rate hikes if necessary. In contrast, Governor Miran affirmed that the “dot plot” indicating the lowest range for the fed funds rate was attributed to him, expressing his belief that a 50 bps cut “would worry markets.” In France, protests are creating downward pressure on the shared currency as hundreds of thousands gathered in the country’s major cities on Thursday to urge President Emmanuel Macron and newly appointed Prime Minister Sebastien Lecomu to abandon the spending cuts proposed by former Prime Minister François Bayrou. In the upcoming week, the US economic calendar will include S&P Global Flash PMIs, Durable Goods Orders, Jobless Claims, GDP figures, and the release of the Federal Reserve’s preferred inflation measure, the Core PCE. In addition, a wave of Fed officials will engage with the media.
Latest Fx Rate Trends : EUR/USD constrained by comments on the Fed’s neutral stance
- Mary Daly observed that the Federal Reserve’s decision to reduce interest rates aimed to support a faltering labor market, highlighting a distinct softening of the US economy throughout the past year.
- Minneapolis Minnesota Fed President Neel Kashkari expressed his support for the rate cut this week, citing concerns that an increase in unemployment necessitated a response. He said that it is hard to see inflation climbing much higher than 3% from tariffs and added that if the jobs market improves and inflation rises, the Fed should hold rates.
- Fed Governor Stephen Miran indicated that the economy ought to maintain an interest rate close to the neutral rate. He stated that he will disclose a reassessment of his perspectives on Monday.
The US Dollar Index, which measures the dollar’s value against a selection of six currencies, has increased by 0.31% to reach 97.66. - On the previous Thursday, the weekly US Initial Jobless Claims decreased to 231K for the week ending September 13, falling short of the anticipated 240K and significantly down from the previous week’s upwardly adjusted figure of 264K.
- In September, the Philadelphia Fed Manufacturing Index experienced a significant rebound, rising to 23.2 from August’s -0.3. This figure greatly exceeded the anticipated 2.3, indicating strong activity within the sector.
- Futures markets indicate a 90% likelihood of a 25-basis-point Fed rate cut this month, alongside an almost 80% probability of an additional quarter-point reduction in December.