Euro Holds Position Amidst Fed Rate Cut Expectations
The euro steadied at $1.16 mark, hovering near its strongest level since November, as odds of US Fed rate cuts impact decisions in the forex market.
Due to dollar selloffs, the Euro to Dollar (EUR/USD) exchange rate found support below 1.1500 this month and has rallied to just below 1.1600.
The U.S. dollar headed for its steepest weekly drop in four months on Thursday as investors bet on further monetary easing, amid pressure from President Donald Trump to cut rates.
The yen edged 0.10 per cent higher to 156.33 per dollar, helped by a hawkish turn in tone from Bank of Japan officials. U.S. markets are shut for Thanksgiving, leaving liquidity thin and amplifying trading moves.
“That could be an attractive environment for Japanese authorities to intervene in dollar/yen,” said Francesco Pesole, forex strategist at ING.
Hopes that a peace proposal from the US could resolve the conflict have lifted the Euro in recent days, with positive signs that both sides are keen to work towards a resolution.
On Thursday, The euro reached a four-day high of about $1.1585 yesterday.
The EURUSD pair approached more formidable resistance near $1.1600, which is reinforced by a little more than one billion euros of options at $1.1595 that expire today and another stack at $1.1575 that expires tomorrow at $1.1575.
Meanwhile, the eurozone reports money supply and lending figures tomorrow and the highlight of the week is Friday’s release of national November CPI figures from economic and monetary union’s largest members.
The ECB’s October meeting reaffirmed the central bank’s ‘good place’ stance, even though the phrase appeared only three times in the minutes and was never part of the official introductory statement.
“While most members seem to agree that downside risks have eased slightly, the minutes reveal a lively discussion on inflation risks, with views becoming increasingly divergent”, ING said in a note.
European Central Bank Vice President said on Thursday that the euro area labor market remains well situated, even if the pace of job creation is weaker than in previous years.
Speaking at the 24th CEDE Congress of Executives in Zaragoza, Spain, de Guindos said that the European economy was performing better than expected a few quarters ago, when uncertainty surrounding the US-EU trade agreement weighed on sentiment.
On the policy front, the ECB is widely expected to keep interest rates unchanged through 2026, supported by a resilient economic backdrop and inflation trending toward its target.
