The EUR/USD pair experienced a decline during the North American session on Monday, falling by 0.41% as the US Dollar recovers some of its losses from Friday, influenced by US President Donald Trump’s warnings regarding potential additional tariffs on Chinese goods. The pair is currently trading at 1.1571, having reached a daily high of 1.1630 earlier.
The EUR/USD pair declines by 0.41%, reaching 1.1571, as Trump reintroduces tariff threats while subsequently moderating his stance on China. The reappointment of French PM Lecornu has led to a no-confidence motion, further intensifying political tensions within the Eurozone. Market participants are closely monitoring significant addresses from Fed Chair Powell and ECB President Lagarde for insights on policy direction this week.
> The dollar strengthens as tariff threats loom; French political instability impacts the Euro : The US Dollar is showing signs of recovery following a recent escalation in the trade war between the US and China. This situation was marked by Trump’s threats to impose additional tariffs of 100% on Chinese goods, set to take effect on November 1. The retaliation was a reaction to China’s escalating limitations on rare-earth elements and the implementation of port fees on U.S. vessels. On Sunday, Trump reversed his stance, stating on his Truth Social account, “Don’t worry about China, it will all be fine!” President Xi, a figure of significant respect, has recently experienced a challenging moment. He is not in favor of economic downturn for his country. The U.S.A. aims to assist China, not to harm it!!! As a result, EUR/USD commenced Monday’s session on a weaker note, falling beneath the 1.1600 level due to the persistent political instability in France, following President Emmanuel Macron’s decision to reappoint Sébastien Lecornu as Prime Minister. Lecornu has established a new cabinet; however, opposition leaders Marine Le Pen and Eric Ciotti have swiftly introduced a no-confidence motion targeting the destabilization of Lecornu’s government. Concerns regarding France may continue to exert pressure on the Euro, potentially prolonging the US Dollar’s strength against the shared currency. This, despite the ongoing central bank divergence, indicates that additional upward movement in the EUR/USD pair is anticipated. The upcoming weekly economic docket will include addresses from Federal Reserve Chair Jerome Powell and European Central Bank President Christine Lagarde.
Latest FX Rate Trends : The Greenback’s ascent surpasses that of the Euro, even in light of dovish remarks from the Fed
- The US Dollar Index, which monitors the value of the dollar against a selection of six currencies, increases by 0.35% to 99.24, presenting a challenge for the euro.
- Philadelphia Fed President Anna Paulson supports further rate cuts, citing increasing risks in the labor market. She stated, “Labor market risks do appear to be increasing – not outrageously, but noticeably.” And momentum appears to be shifting unfavorably,” thus it warrants attention in policy considerations.
- In addition to Lagarde’s speech on Thursday, the economic calendar in the Eurozone will include Germany’s Harmonized Index of Consumer Price figures and a speech by the ECB’s Mario Cipollone on Tuesday.
- Last week, the UoM Consumer Sentiment decreased marginally to 55 from 55.1, surpassing expectations for a decline. The survey indicated that inflation expectations for the one-year horizon decreased slightly from 4.7% to 4.6%, while those for the five-year period remained stable at 3.7%.
- The survey indicated a decrease in sentiment among Democrats. In summary, consumers exhibited a negative outlook regarding their future personal finances, and the environment for purchasing durable goods was not conducive.
- The money markets are currently reflecting a complete pricing in of a 25-basis-point rate cut at the Federal Reserve’s meeting on October 29, with the probability standing at 97%.