The EUR/USD concluded Friday with a decline of 0.10%, yet the week wrapped up positively with an increase of 0.51%, as risk appetite waned due to rising speculation regarding a potential pause in the Federal Reserve’s easing cycle next month. Nonetheless, the pair concluded above the 1.1600 level, setting the stage for additional upward movement.
EUR/USD experiences a decline of 0.10% on Friday; however, it concludes the week with an increase of 0.51%, maintaining its position above crucial support levels. Federal Reserve officials are adopting a hawkish stance, reducing the likelihood of a rate cut in December to 56%, although there are concerns regarding weaknesses in the labor market. The Eurozone’s Q3 GDP has increased by 0.2% quarter-over-quarter and 1.4% year-over-year, providing some modest support to the Euro.
> The Euro concluded Friday with a slight decline, yet it achieved weekly gains, bolstered by mixed signals from the Fed and consistent growth in the Eurozone : Since Wednesday, most Federal Reserve officials have maintained a hawkish stance. Regional Fed bank presidents, including Beth Hammack, Raphael Bostic, Alberto Musalem, Susan Collins, Neel Kashkari, and Jeffrey Schmid, supported a moderately restrictive monetary policy. On the dovish front are Fed Governor Stephen Miran, San Francisco Fed’s Mary Daly, and Governors Christopher Waller and Michelle Bowman, who noted the deterioration of the labor market. The Fed Chair Jerome Powell and New York Fed John Williams maintain a neutral stance. However, Fed Chair Powell indicated that the December cut was not a foregone conclusion, maintaining flexibility in light of the absence of economic data. The money market has assessed a 56% probability for a 25-basis points rate cut, a decrease from approximately 70% a year prior, as indicated by the Prime Market Interest Rate Probability tool. In Europe, the latest data indicated a quarterly economic growth of 0.2% for Q3. The Gross Domestic Product year-over-year has been adjusted upward from 1.3% to 1.4%.
Latest FX Rate Trends : The Euro relinquished its gains following the hawkish remarks from the Fed
- The US Dollar Index, which monitors the value of the dollar against six other currencies, experienced a slight increase of 0.08%, reaching 99.31.
- On Friday, the communications from Federal Reserve’s Governor Stephen Miran and Kansas City Fed President Jeffrey Schmid were released. The former reinforced his dovish position, stating that recent data “should make the Fed more dovish, not less,” and cautioning that policymakers may face errors if they depend excessively on historical indicators.
- In contrast, Schmid reaffirmed the basis for his disagreement with the recent rate cut, stating: “My rationale for dissenting against the rate cut at the last meeting continues to guide my thinking heading into December.” He stated that he perceives the present monetary policy position as “only modestly restrictive,” which he considers to be suitable.