- EUR/USD recovers initial losses on Wednesday in the Asian session.
- The US Dollar Index backtracks from yearly highs despite a rebound in US T-bond yields.
- Divergent monetary policy outlooks between the ECB and Fed weighs on the euro, US inflation eyed.
The EUR/USD holds gains in the Asian session on Wednesday. After testing the fresh 2021 lows around 1.1520 in the overnight session, the pair rebounded and bounced back above 1.1550. At the time of writing, EUR/USD is trading at 1.1552, up 0.22% for the day.
A combination of factors sponsored the movement in the pair. The pullback in the greenback from a one-year high of around 94.50 remains the major catalyst to push EUR/USD on the higher side.
Investors remain cautious ahead of the US Core Inflation Index (CPI) data, as a higher reading could propel the Fed’s to start tapering as early as November. In addition to that, the minutes of the Fed’s latest policy meet will also shed light on the timeline of the Fed’s action.
The Consumer Inflation consensus pointed to a 5.3% rise in the CPI for September on yearly basis, confirming the supply-demand imbalances in the economy. The number of US job openings fell 10.439 million in August, below the market expectations of 10.925 million. Meantime, the US House of Representatives approved the government’s borrowing limit to $28.9 trillion, pushing off the deadline for debt default only until December.
On the other hand, the shared currency holds ground despite the European Central Bank’s (ECB) dovish outlook. ECB Governing Council member Francois Villeroy de Galhau showed his concern over the failure of meeting the 2023 inflation target then exceed it. His comments seem to support the existing accommodative monetary policy. The eurozone investor morale declined to 21.0 in October, well short of the market expectations of 37.0.
As for now, traders are waiting for the German Harmonized Index of Consumer Prices, Eurozone Industrial Production, US CPI data, and the FOMC minutes to gain fresh trading impetus.
EUR/USD additional levels
Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer. Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. Risk Disclosure: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.
Recommended content
Editors’ Picks
EUR/USD stays near 1.0400 in thin holiday trading
EUR/USD trades with mild losses near 1.0400 on Tuesday. The expectation that the US Federal Reserve will deliver fewer rate cuts in 2025 provides some support for the US Dollar. Trading volumes are likely to remain low heading into the Christmas break.
GBP/USD struggles to find direction, holds steady near 1.2550
GBP/USD consolidates in a range at around 1.2550 on Tuesday after closing in negative territory on Monday. The US Dollar preserves its strength and makes it difficult for the pair to gain traction as trading conditions thin out on Christmas Eve.
Gold holds above $2,600, bulls non-committed on hawkish Fed outlook
Gold trades in a narrow channel above $2,600 on Tuesday, albeit lacking strong follow-through buying. Geopolitical tensions and trade war fears lend support to the safe-haven XAU/USD, while the Fed’s hawkish shift acts as a tailwind for the USD and caps the precious metal.
IRS says crypto staking should be taxed in response to lawsuit
In a filing on Monday, the US International Revenue Service stated that the rewards gotten from staking cryptocurrencies should be taxed, responding to a lawsuit from couple Joshua and Jessica Jarrett.
2025 outlook: What is next for developed economies and currencies?
As the door closes in 2024, and while the year feels like it has passed in the blink of an eye, a lot has happened. If I had to summarise it all in four words, it would be: ‘a year of surprises’.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.