EUR/USD experiences a decline of 0.17% in the North American session on Friday, as the Greenback reduces its earlier losses following US President Donald Trump’s moderation of his trade rhetoric concerning China. The currency pair is currently trading at approximately 1.1666, following a daily peak of 1.1728.
Trump states that elevated tariffs on China are “not sustainable,” which has resulted in a stronger Dollar and a reduction in trade tensions. Fed officials Waller, Musalem, and Kashkari indicate a favorable stance towards additional cuts, while cautioning that inflation continues to be a pressing concern. Eurozone inflation data aligns with expectations; market participants focus on next week’s US CPI for new guidance.
> The Euro has pulled back from its daily peaks as risk appetite strengthens and comments from the Fed remain cautiously dovish : Risk appetite showed signs of improvement, following US President Donald Trump’s statement that high tariffs on China were not sustainable and would likely escalate tensions between the two nations. He stated his intention to meet Xi Jinping at the Asian Pacific reunion in South Korea. Following the headlines, the Greenback recovered from its previous losses and appreciated in value. The US Dollar Index, which monitors the value of the dollar relative to a selection of other currencies, has increased by 0.09%, reaching 98.42. The absence of economic data leads traders to rely on statements from Federal Reserve officials as they emerge in the news. The majority of the comments exhibited a somewhat dovish stance, primarily articulated by Governor Christopher Waller. In the meantime, St. Louis Fed President Alberto Musalem and Minneapolis Fed Neel Kashkari, while advocating for additional cuts, emphasized that inflation continues to be elevated. In Europe, the Harmonized Index of Consumer Prices closely matched expectations in September. In the upcoming week, the US economic calendar shows no significant events; however, market participants are keenly anticipating the release of the Consumer Price Index figures on Friday.
Latest FX Rate Trends : The Dollar strengthens, even in light of the Fed’s dovish remarks
- On Friday, multiple Federal Reserve officials addressed the public, conveying a tone that was cautiously dovish. St. Louis Fed President Alberto Musalem expressed his support for a rate cut at the upcoming October meeting, while also reaffirming his unwavering commitment to achieving the 2% inflation target.
- Fed Governor Christopher Waller reiterated Musalem’s comments, while Minneapolis Fed President Neel Kashkari observed that the economy “is not slowing as much as we think,” indicating resilience in light of recent data softening.
- In September, Eurozone inflation data aligned closely with expectations, indicating stable price dynamics. The Core HICP increased by 0.1% month-over-month and 2.4% year-over-year, marginally exceeding the anticipated 2.3% rate. Headline HICP increased by 0.1% month-over-month and 2.2% year-over-year, aligning with both forecasts and the figures from August.
- Officials from the European Central Bank expressed a prudent outlook on Friday. Olaf Sleijpen stated that while policy is currently “in a good place,” this does not guarantee its stability, highlighting that the economy has demonstrated greater resilience than anticipated. Joachim Nagel stated that there is currently no necessity to adjust interest rates.
- On Tuesday, Fed Chair Jerome Powell adopted a dovish stance, recognizing the labor market’s weaknesses and suggesting that the central bank should transition to more “neutral” interest rates.
- Money markets are currently reflecting a complete pricing in of a 25-basis-point rate cut at the Fed’s meeting on October 29, with the probability standing at 97%, as indicated by the Prime Market Terminal probability tool.