- EUR/USD rebounds to near 1.0400 as the US Dollar takes a breather after the rally induced by the Fed’s hawkish guidance.
- Fed officials see only two interest rate cuts in 2025, fewer than the four projected earlier.
- ECB Wunsch said he is comfortable with market expectations of four 25 bps interest rate cuts in 2025.
EUR/USD jumps above 1.0400 in Thursday’s European session as US Dollar’s (USD) bulls take a breather after a sharp run-up on Wednesday. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, clings to gains near a fresh two-year high above 108.00. The Greenback attracted significant bids after the Federal Reserve (Fed) reduced its key borrowing rates by 25 basis points (bps) to 4.25%-4.50% on Wednesday, as expected, but signaled fewer interest rate cuts for the next year.
In the latest dot plot, the Fed revised its projections for the number of interest rate cuts in 2025 to two from the four forecasted in the September monetary policy meeting.
In the press conference, Fed Chair Jerome Powell cited uncertainty over inflation, easing downside risks to employment, and strong growth in the second half of the year as factors that forced officials to be cautious about interest rate cuts. I also point out that we're closer to the neutral rate, which is another reason to be cautious about further moves," Powell added.
Meanwhile, the Fed has also revised the forecast for the core Personal Consumption Expenditures Price Index (PCE), the Fed's preferred inflation measure, for 2025 to 2.5%, up from prior estimates of 2.2% in its latest economic projections.
Jerome Powell refrained from commenting on the consequences of the incoming immigration, tariff, and taxation policies by President-elect Donald Trump on the economy. "It is very premature to make any kind of conclusions,” he said. “We don’t know what will be tariffed, from what countries, for how long, in what size," Powell added.
Daily digest market movers: EUR/USD advances as Euro performs strongly
- EUR/USD advances on Thursday as the Euro (EUR) performs strongly against its major peers even though European Central Bank (ECB) officials have guided a continuation of the policy-easing spell in 2025. The ECB has already reduced its Deposit Facility rate by 100 basis points (bps) to 3% and is expected to cut by a similar margin next year.
- ECB policymaker and Governor of National Bank of Belgium Pierre Wunsch has also backed four more interest rate cuts, citing concerns over Eurozone economic growth due to protectionist US policies under Trump’s administration. “Four more rate cuts are a meaningful scenario that I feel relatively comfortable with,” Wunsch said.
- Pierre Wunsch openly discussed a potential Euro parity with the US Dollar in an attempt to compensate for the 10% tariffs by the US. “If the Euro touches parity against the dollar, we wouldn't lose as much in terms of competitiveness,” Wunsch said and added: “A larger Euro depreciation would cushion the impact of tariffs on growth.”
- In Thursday’s session, the shared currency pair will be influenced by the US Initial Jobless Claims data for the week ending December 13 and the second estimate of Q3 Gross Domestic Product (GDP), which will be published at 13:30 GMT.
- On Friday, investors will pay close attention to the US PCE inflation data for November. The core PCE Price Index data is estimated to have accelerated to 2.9% from 2.8% in October. On month, the inflation measure is expected to have grown by 0.2%, slower than the prior release of 0.3%.
Euro PRICE Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.51% | -0.64% | 1.38% | -0.28% | -0.21% | 0.10% | -0.51% | |
| EUR | 0.51% | -0.14% | 1.86% | 0.24% | 0.29% | 0.61% | 0.00% | |
| GBP | 0.64% | 0.14% | 2.04% | 0.37% | 0.43% | 0.75% | 0.16% | |
| JPY | -1.38% | -1.86% | -2.04% | -1.63% | -1.57% | -1.29% | -1.83% | |
| CAD | 0.28% | -0.24% | -0.37% | 1.63% | 0.07% | 0.36% | -0.21% | |
| AUD | 0.21% | -0.29% | -0.43% | 1.57% | -0.07% | 0.32% | -0.27% | |
| NZD | -0.10% | -0.61% | -0.75% | 1.29% | -0.36% | -0.32% | -0.58% | |
| CHF | 0.51% | -0.00% | -0.16% | 1.83% | 0.21% | 0.27% | 0.58% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
Technical Analysis: EUR/USD rebounds from three-week low of 1.0340
EUR/USD bounces back after refreshing a more than three-week low at 1.0340 after the Fed meeting. However, the outlook of the major currency pair remains clearly bearish as all short-to-long-term Exponential Moving Averages (EMAs) are declining.
The 14-day Relative Strength Index (RSI) slides into the bearish range of 20.00-40.00, suggesting that a fresh downside momentum has been triggered.
Looking down, the pair could decline to near the round-level support of 1.0200 after breaking below the two-year low of 1.0330. Conversely, the 20-day EMA near 1.0500 will be the key barrier for the Euro bulls.
Economic Indicator
Interest Rate Projections - 1st year
At four of its eight scheduled meetings, the Federal Reserve (Fed) releases a Summary of Economic Projections, or ‘dot-plot’. This shows each member of the Federal Open Market Committee’s (FOMC) forecast for where they expect the federal funds rate (the interest rate at which banks lend to each other) will go in the future. It can have a major impact on the US Dollar (USD), particularly if members change their forecasts. It is widely used as a guide to figure out the terminal rate and the possible timing of a policy pivot.
Read more.Last release: Wed Dec 18, 2024 19:00
Frequency: Irregular
Actual: 3.9%
Consensus: -
Previous: 3.4%
Source: Federal Reserve
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
GBP/USD clings to recovery gains near 1.2600 ahead of BoE rate decision
GBP/USD holds ground near 1.2600 after declining more than 1% following the Federal Reserve’s hawkish cut on Wednesday. The Pound Sterling gains upward support as the Bank of England is anticipated to keep interest rates unchanged later in the day.
EUR/USD retakes 1.0400 amid the post-Fed recovery
EUR/USD is recovering ground to near 1.0400 in the European session on Thursday. The pair corrects higher, reversing the hawkish Fed rate cut-led losses. Meanwhile, the US Dollar takes a breather ahead of US data releases.
Gold price recovers further from one-month low, climbs to $2,620 amid risk-off mood
Gold price attracts some haven flows in the wake of the post-FOMC sell-off in the equity markets. The Fed’s hawkish outlook lifts the US bond yields to a multi-month high and might the XAU/USD. Traders now look to the US Q3 GDP print for some impetus ahead of the US PCE data on Friday.
BoE expected to stand pat, highlighting gradual approach toward lowering interest rate
The Bank of England is set to keep the interest rate on hold, hinting at 2025 action. UK inflation accelerated further in November, albeit within expectations. GBP/USD trades within a well-limited 200 pips range ahead of the announcement.
Fed-ECB: 2025, the great decoupling?
The year 2024 was marked by further progress in disinflation in both the United States and the Eurozone, sufficient to pave the way for rate cuts. The Fed and the ECB did not quite follow the same timetable and tempo, but by the end of the year, the cumulative size of their rate cuts is the same: 100 basis points.
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.