EUR/USD edges higher during the North American session, up 0.42% amid growing speculation that the Federal Reserve would continue easing policy, amid a scarce economic docket on both sides of the Atlantic. The pair is currently at 1.1757, having recovered from daily lows of 1.1706.
EUR/USD increases by 0.42% to 1.1757, recovering from 1.1706 as the Dollar softens amid diminishing speculation. Fed officials highlight CPI irregularities, yet markets continue to anticipate the first rate cut in 2026 around mid-June. ECB policymakers are minimizing hawkish signals, as traders look forward to important growth data from the US and Eurozone.
> Euro continues to strengthen as limited data emerges, with traders concentrating on dovish Fed expectations and varied central bank statements : Data in the US was limited as traders processed remarks from Federal Reserve officials, including Governor Stephen Miran and Cleveland’s Fed President Beth Hammack. Both maintained their dovish and hawkish positions, respectively, while agreeing that the recent release of the Consumer Price Index for November showed some irregularities due to the 43-day US government shutdown. Meanwhile, expectations that the Fed will cut rates next year remain high, with the first 25 basis points reduction anticipated in June 17. Across the pond, several members of the European Central Bank, led by Isabel Schnabel, commented that she “didn’t say rates should be raised.” Ahead in the week, the schedule in Europe will include Gross Domestic Product figures for Germany and Spain. In the US, the schedule will be packed, featuring the release of the ADP Employment Change 4-week average, followed by GDP figures for Q3, Industrial Production, and Consumer Confidence data.
Latest FX Rate Trends : US Dollar weakness, ECB comments enhance the Euro
- The weakness of the US Dollar supports the shared currency. The US Dollar Index, which tracks the performance of the buck’s value against a basket of six peers, tumbles 0.45%, at 98.27 a tailwind for the Euro.
- Cleveland Fed President Beth Hammack adopted a hawkish stance, cautioning that the CPI for November might have downplayed yearly price pressures because of data inconsistencies. She mentioned that the neutral interest rate might exceed typical assumptions, advocating for prudence regarding additional easing.
- In a separate statement, Fed Governor Stephen Miran highlighted irregularities in CPI data associated with the government shutdown. He stated that recent data supports his evaluation of the current economic landscape and emphasized that further policy rate cuts are probable moving forward.
- Last Thursday, US inflation for November eased to 2.7% year-on-year, down from the prior 3% reading. However, experts cautioned that the data should be interpreted with care, as the 43-day US government shutdown may have distorted parts of the economic reporting.
- ECB Schnabel stated that no rate hikes are anticipated in the near term, and that “at some point we will need to increase rates again.” She maintained a hawkish stance, stating, “more inflationary than disinflationary forces at work.”
- ECB’s Vujcic indicated that inflation and growth risks are balanced, noting that the next adjustment in rates could go in either direction. Meanwhile, Kazimir stated that the ECB continues to be adaptable and that his primary concern lies with long-term growth prospects.