08 October 2024, EUR/USD
EURUSD:
The Dollar-Euro pair continues to recover to the level of 1.0985 in the early hours of the European session on Tuesday. The major pair is rising amid a slight weakening of the US dollar (USD). However, the EUR/USD growth may be limited as traders expect a smaller interest rate cut by the US Federal Reserve (Fed) in November.
French Central Bank Governor Francois Villeroy de Gallo said on Tuesday that the European Central Bank (ECB) will cut interest rates next week as economic growth is weak, raising the risk that inflation will miss its 2% target. The comments support market pricing in a further 150bps of ECB rate cuts over the next twelve months.
Later on Tuesday, the ECB's Isabel Schnabel is due to speak and German industrial production data will be released. Softer statements from ECB policymakers or any signs of weakness in Europe's largest economy could lead to a decline in the Euro against the US Dollar.
As for the US dollar, encouraging US jobs data on Friday raised expectations that the Federal Reserve will cut rates by 25 basis points (bps) at the central bank's November meeting. This, in turn, could lead to a significant rise in the US Dollar and limit EUR/USD gains. The probability of a 25 bps Fed rate cut is 85%, up from 31.1% last week, according to CME FedWatch Tool data.
Trading recommendation: Watch the level of 1.1000, when consolidating above it consider Buy positions, when rebounding consider Sell positions.
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