Created
: 2024.09.10
2024.09.10 13:39
The EUR/USD pair recovers a few pips from a one-week low, around the 1.1030-1.1025 area touched during the Asian session on Tuesday and for now, seems to have snapped a two-day losing streak. Any meaningful appreciating move, however, still seems elusive in the wake of some follow-through US Dollar (USD) buying.
Investors have been scaling back their bets for a larger, 50 basis points (bps) interest rate cut by the Federal Reserve (Fed) in September following the release of mixed US jobs report on Friday. This assists the Greenback in attracting some buyers for the third successive day and climbing back closer to the monthly peak touched last week, which, in turn, is seen acting as a headwind for the EUR/USD pair.
The shared currency's relative underperformance could further be attributed to growing market expectations that the European Central Bank (ECB) will cut interest rates again in September in the wake of declining inflation in the Eurozone. This might further contribute to capping the EUR/USD pair, though the downside is likely to remain cushioned ahead of this week's key data/central bank event risks.
The latest US consumer inflation figures are due for release on Wednesday, followed by the US Producer Price Index (PPI) on Thursday. This will play a key role in influencing market expectations about the size of the Fed rate cut move later this month, which, in turn, will drive the USD demand. Apart from this, the crucial ECB policy decision on Thursday will provide a fresh directional impetus to the EUR/USD pair.
In the absence of any relevant market-moving economic releases on Tuesday, either from the Eurozone or the US, the aforementioned fundamental backdrop warrants caution for bulls. Hence, it will be prudent to wait for strong follow-through buying before confirming that the recent corrective pullback from the 1.1200 round-figure mark, or over a one-year high touched in August has run its course.
One of the three key interest rates set by the European Central Bank (ECB), the main refinancing operations rate is the interest rate the ECB charges to banks for one-week long loans. It is announced by the European Central Bank at its eight scheduled annual meetings. If the ECB expects inflation to rise, it will increase its interest rates to bring it back down to its 2% target. This tends to be bullish for the Euro (EUR), since it attracts more foreign capital inflows. Likewise, if the ECB sees inflation falling it may cut the main refinancing operations rate to encourage banks to borrow and lend more, in the hope of driving economic growth. This tends to weaken the Euro as it reduces its attractiveness as a place for investors to park capital.
Read more.Next release: Thu Sep 12, 2024 12:15
Frequency: Irregular
Consensus: 4%
Previous: 4.25%
Source: European Central Bank
Created
: 2024.09.10
Last updated
: 2024.09.10
FXStreet is a forex information website, delivering market analysis and news articles 24/7.
It features a number of articles contributed by well-known analysts, in addition to the ones by its editorial team.
Founded in 2000 by Francesc Riverola, a Spanish economist, it has grown to become a world-renowned information website.
We hope you find this article useful. Any comments or suggestions will be greatly appreciated.
We are also looking for writers with extensive experience in forex and crypto to join us.
please contact us at [email protected].
Disclaimer:
All information and content provided on this website is provided for informational purposes only and is not intended to solicit any investment. Although all efforts are made in order to ensure that the information is correct, no guarantee is provided for the accuracy of any content on this website. Any decision made shall be the responsibility of the investor and Myforex does not take any responsibility whatsoever regarding the use of any information provided herein.
The content provided on this website belongs to Myforex and, where stated, the relevant licensors. All rights are reserved by Myforex and the relevant licensors, and no content of this website, whether in full or in part, shall be copied or displayed elsewhere without the explicit written permission of the relevant copyright holder. If you wish to use any part of the content provided on this website, please ensure that you contact Myforex.
Myforex uses cookies to improve the convenience and functionality of this website. This website may include cookies not only by us but also by third parties (advertisers, log analysts, etc.) for the purpose of tracking the activities of users. Cookie policy