EUR/USD remains stable around the 1.1600 level on Wednesday, with a limited economic calendar on both sides of the Atlantic as market participants anticipate the postponed US Consumer Price Index report, scheduled for release on Friday.
The EUR/USD pair is currently stable, hovering around the 1.1600 mark, whereas the DXY index shows a slight decline, positioned at 98.92. The US government shutdown has reached day 22, showing minimal indications of a resolution. ECB’s Kazaks indicates that the next rate adjustment could “as easily be a hike as a cut,” underscoring the prevailing policy uncertainty.
> The Euro exhibits subdued price movement in the context of limited data and ongoing uncertainty surrounding trade : The pair is currently experiencing slight gains of 0.05%, while the US Dollar Index, which evaluates the performance of the American currency against six others, has decreased by 0.04%, standing at 98.92. The financial markets are heavily influenced by geopolitics, with ongoing US-China trade tensions and the unresolved Russia–Ukraine conflict impacting the shared currency. The cancellation of the Putin-Trump meeting in Budapest marks a significant point in the trajectory of the Euro’s performance. In addition, reports indicate that the US is contemplating “curbs on exports to China made with US software,” implying that heightened risk aversion may lead to a decline in EUR/USD. The US government has been in a state of shutdown for 22 days, with little indication of progress. Hakeem Jeffries expresses optimism that a resolution may be reached by the end of October. In Europe, Martins Kazaks indicated that the next rate move could just as likely be a hike as it could be a cut. This week, the US economic calendar includes the S&P Global Purchasing Managers Indices scheduled for Friday, in addition to the release of September’s CPI. In Europe, Flash PMIs for major economies will provide insights into the global monetary policy outlook.
Latest FX Rate Trends : Euro’s constrained by geopolitical factors
- According to sources, “The Trump administration is considering a plan to curb a dizzying array of software-powered exports to China, from laptops to jet engines, to retaliate against Beijing’s latest round of rare earth export restrictions, according to a US official and three people briefed by US authorities.”
- Market participants are closely monitoring the upcoming release of the US CPI in anticipation of next week’s Federal Reserve monetary policy decision. The US central bank is anticipated to reduce rates by 25 basis points, bringing them to the 3.75% – 4% range. Traders are already factoring in a further 0.25% cut for the December meeting.
- Next week, the ECB is anticipated to maintain rates at their current levels, with probabilities at 98%.