- EUR/USD fails to attract any follow-through buying and oscillates in a range on Friday.
- Bets that any further ECB rate hikes may be off the table act as a headwind for the Euro.
- The prospects for further policy tightening by the Fed underpins the USD and cap gains.
- Traders now look to the Eurozone CPI for some impetus ahead of the US PCE Price Index.
The EUR/USD pair struggles to capitalize on the previous day's bounce from levels just below the 1.0500 psychological mark or a fresh eight-month low and oscillates in a narrow band during the Asian session on Friday. Spot prices currently trade around the 1.0560 area, nearly unchanged for the day as traders now look to key inflation figures from the Eurozone and the US.
The flash version of the Eurozone Consumer Price Index (CPI) is expected to show that the annualized CPI moderated from 5.3% to 4.8% rate in September. Apart from this, signs of the beginning of the end of the high inflation in Germany – Europe's largest economy – and looming recession risks will reaffirm the view that the next move by the European Central Bank (ECB) is likely to be a rate cut. This, along with the underlying bullish tone surrounding the US Dollar (USD), could attract fresh sellers around the EUR/USD pair and pave the way for an extension of the recent well-established downtrend witnessed over the past two months or so.
The USD Index (DXY), which tracks the Greenback against a basket of currencies, stalls the overnight retracement slide from the YTD peak that followed the release of the rather unimpressive US macro data. According to the final estimate published by the US Bureau of Economic Analysis (BEA), the world's largest economy expanded by a 2.1% annualized pace, in line with the previous estimate and market expectations. The GDP Price Index, however, fell from 2% to 1.7%, suggesting that price pressure is easing further, and weighed on the USD, though growing acceptance that the Federal Reserve (Fed) will stick to its hawkish stance helped limit losses.
The US central bank warned last week that still-sticky inflation in the US was likely to attract at least one more interest rate hike by the end of this year. Adding to this, Minneapolis Fed President Neel Kashkari said earlier this week that it is not clear yet whether the central bank is finished raising rates amid ample evidence of ongoing economic strength. This, along with the US economic resilience, should allow the Fed to keep interest rates higher for longer. The outlook remains supportive of eevated US Treasury bond yields and favours the USD bulls, suggesting that the path of least resistance for the EUR/USD pair remains to the downside.
Traders, however, might refrain from placing aggressive bets and might prefer to wait on the sidelines ahead of Friday's release of the US Core PCE Price Index – the Fed's preferred inflation gauge. The data will play a key role in influencing market expectations about the next policy move by the US central bank, which, in turn, will drive the USD demand and provide some meaningful impetus to the EUR/USD pair on the last day of the week. Nevertheless, spot prices remain on track to end in the red for the eleventh straight week.
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD retreats to 1.0950 area as safe-haven flows dominate markets
EUR/USD loses its traction and declines to the 1.0950 area following a recovery attempt earlier in the day. The risk-averse market atmosphere makes it difficult for the pair to hold its ground as investors grow increasingly concerned over a deepening trade war weighing on global economic activity.
GBP/USD drops to fresh monthly low, tests 1.2800
GBP/USD stays under persistent bearish pressure in the European session on Monday and trades at its lowest level in a month near 1.2800. The intense flight-to-safety remains the main market theme after US President Donald Trump's tariffs triggered a global trade war last week.
Gold price holds above $3,000 amid a global meltdown; bulls seem non-committed
Gold price attracts some sellers near the $3,055 support-turned-resistance and stalls its intraday recovery from the $2,972-2,971 area, or a nearly four-week low touched earlier this Monday. Investors continue to unwind their bullish positions to cover losses from a broader meltdown across the global financial markets
Solana Price Forecast: Bears gain momentum as SOL falls below $100
Solana (SOL) extends its loss by over 7% and falls below the $100 mark at the time of writing on Monday after crashing 15.15% last week. Coinglass data shows that SOL’s leveraged traders wiped out nearly $70 million in liquidations in the last 24 hours.
Strategic implications of “Liberation Day”
Liberation Day in the United States came with extremely protectionist and inward-looking tariff policy aimed at just about all U.S. trading partners. In this report, we outline some of the more strategic implications of Liberation Day and developments we will be paying close attention to going forward.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.