The EUR/USD pair is set to conclude the week with a decline of 0.21%, although it continues to hold above the 1.16 mark for the third consecutive day. The upside is constrained by significant resistance levels, as recent US data may not dissuade the Federal Reserve from implementing rate cuts.
EUR/USD remains stable, poised for a 0.21% weekly decline while maintaining a three-day streak above crucial support levels. The US CPI has fallen short of expectations, solidifying a 96% probability of a rate cut by the Fed in October. Eurozone PMIs exceeded expectations; however, Moody’s has downgraded France’s outlook to negative due to fiscal and political risks.
> Euro buoyed by positive PMIs. Moody’s caution regarding France constrains upward potential : The recent inflation data in the US did not align with expectations, falling short on the downside, which is unlikely to bolster the position of Fed hawks. However, it still remains significantly above the central bank’s target of 2%. Following that, S&P Global indicated that the economy exhibits signs of robustness as manufacturing and services flash PMIs demonstrated expansion in October. Meanwhile, the University of Michigan concluded the docket for the day as the US government shutdown entered its twenty-fourth day, indicating a slight increase in pessimism among US consumers, who are forecasting that prices may continue to escalate. Recently, the Greenback has reduced some of its gains following the Trump administration’s initiation of a trade investigation into China’s adherence to a limited trade agreement established in 2020 during President Donald Trump’s first term. In Europe, the HCOB Flash Purchasing Managers Indices for October showed an improvement, rising from 49.8 to 50, and from 51.3 to 52.6, respectively. Both prints surpassed expectations, signaling that business activity is on the rise as demand increases. Currently, Moody’s Ratings has adjusted France’s outlook to negative while maintaining its aa3 ratings. The agency noted, “France’s political instability risks hampering ability to address key policy challenges like elevated fiscal deficit, rising debt burden.”
Latest FX Rate Trends : EUR/USD remains stable in the face of robust US PMI data
- The US Dollar Index, which measures the value of the dollar against a selection of its competitors, has increased by 0.03% to 98.94, thereby limiting the gains of the EUR/USD pair.
- The US Consumer Price Index increased by 3.0% over the 12 months ending in September, falling slightly short of the anticipated 3.1% and showing a modest rise from August’s 2.9% figure. The core CPI, which excludes food and energy, saw a year-over-year increase of 3.0%, reflecting a decrease of one-tenth from the prior month.
- In October, US business activity experienced an acceleration, achieving the second-fastest pace recorded this year, as indicated by the preliminary “flash” PMI data. The report also emphasized the most significant rise in new business observed in 2025 thus far, highlighting ongoing robustness in private-sector performance. The S&P Global Manufacturing PMI increased to 52.2 in October, up from 52.0 in September, indicating ongoing growth in the sector. The Services PMI increased to 55.2 from 54.2, reaching a three-month high and highlighting robust momentum in business activity.
- The University of Michigan’s consumer sentiment index has been adjusted downward to 53.6 in October, a revision from the initial reading of 55.0, falling short of the anticipated 55.1. Inflation expectations for the one-year horizon have decreased marginally to 4.6%, down from 4.7% in September. Conversely, the five-year outlook has increased to 3.9%, rising from 3.7%.
- The US central bank is anticipated to lower rates by 25 basis points to the 3.75% – 4% range, as traders have already factored in a further 0.25% decrease for the December meeting.