The EUR/USD held its ground, set to conclude the week with an increase of 0.39%. Trading activity slowed, constrained by the 1.1650 level as market participants focused on the Federal Reserve’s upcoming decision next week.
EUR/USD is currently consolidating around 1.1650, as technical indicators suggest a potential bearish momentum. US inflation meets expectations, and there is a significant uptick in consumer sentiment. Eurozone growth surpasses forecasts, yet the ECB highlights potential downside risks to inflation.
> The Euro maintains its strength as US inflation and sentiment data influence market perspectives : The recent economic data has strengthened the US Dollar, resulting in a reduction of its earlier losses compared to the Euro. The inflation data in the US largely matched expectations, and the Consumer Sentiment index from the University of Michigan indicated a positive shift. In the Eurozone, the growth figures for the bloc demonstrated the economy’s resilience, with monthly data surpassing expectations. Francois Villeroy of the European Central Bank stated that the current stance of the central bank’s policy does not indicate a comfortable position. He noted that the risks to inflation on the downside are more pronounced than those on the upside. Currently, the unresolved nature of the Russia-Ukraine conflict continues to exert pressure on the Euro. This is despite news headlines indicating some advancements in discussions between the Kremlin and the White House, as well as between Kyiv and Washington.
Latest FX Rate Trends : The US Dollar is reducing its losses, which is impacting the Euro
- The Core Personal Consumption Expenditures Price Index — the Fed’s preferred measure of inflation — recorded a 0.2% month-over-month increase in September, aligning with both the previous month’s figure and analysts’ expectations. On a yearly basis, core PCE decreased from 2.9% to 2.8%, consistent with projections.
- The University of Michigan Consumer Sentiment index for December showed an improvement, with the index surpassing forecasts of 52.0, coming in at 53.3, which is above November’s final reading of 51.1. Inflation expectations have shown a decrease, with one-year expectations declining from 4.5% to 4.1%, and five-year expectations dropping from 3.4% to 3.2%. This indicates a continued reduction in long-term price worries among households.
- In light of the current environment suggesting a moderately hawkish approach, the probability of a 25 basis points Fed rate cut next week has remained steady at 84%, as per indication.
- The US Dollar Index, which monitors the dollar’s performance against six major currencies, concluded with a decline of 0.09% at 98.98.