11 October 2024, EUR/USD
Event to watch out for today:
15:30 GMT+3. USD - Producer Price Index
EURUSD:
The Euro-dollar pair remains on the defensive around 1.0935 in the early European session on Friday. Better-than-expected US inflation data on Thursday provided some support for the dollar and limited the pair's upside.
A warmer Consumer Price Index (CPI) reading combined with a stronger than expected September employment report reinforces the likelihood that any future rate cuts by the US Federal Reserve (Fed) will be gradual. The CME FedWatch tool showed that investors increased the probability that the Fed will cut the discount rate by 25 basis points (bps) in November, to 83.3% following the release of the CPI index.
Market players will be focused on the Producer Price Index (PPI) for September as well as a preliminary reading of the Michigan Consumer Sentiment Index for October, both due out on Friday. The core PPI is expected to have increased 1.6% y/y in September, while the core PPI for the same period is expected to have risen 2.7% y/y. However, if the report shows softer results, it could undermine the US Dollar against the common currency.
European Central Bank (ECB) directors are backing the idea of a rate cut amid slowing economic growth, which could put pressure on the Euro (EUR). The ECB is expected to cut rates twice this year and next week will cut the deposit rate to 3.5%. More than 90% of economists polled by Reuters expect a rate cut next week, and a similar majority are betting on a follow-up move in December.
Trading recommendation: Watch the level of 1.0950, if consolidated above consider Buy positions, if rebounded consider Sell positions.
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