EUR/USD has held off from further losses, but growth is still lacking | 09 October 2024

Event to pay attention to today:

21:00 GMT+3. USD - FOMC Meeting Minutes

EURUSD:

On Tuesday, the EUR/USD remained stable, failing to break from the 1.1000 mark but halting the recent pullback from the 1.1200 area. Since reaching a one-year peak in late September, the euro has lost two-and-a-half per cent against the US dollar, retreating back to the 1.0950 area as markets universally bid the US dollar higher.

The majority of European data releases during the course of the trading week were relatively subdued. The European Central Bank (ECB) is scheduled to hold its next rate meeting next week, so the economic calendar will be largely free of EU data until then.

The latest minutes from the Federal Reserve's (Fed) September rate cut meeting will be released on Wednesday, providing insights for those trading the US dollar. Following the Federal Reserve's decision to cut rates by 50 basis points in September, markets had widely hoped for a follow-up double rate cut in November. However, core inflation remains above the Federal Reserve's target level, and last week's US labour market data, which exceeded expectations, has significantly diminished the likelihood of a rate cut.

According to the CME's FedWatch tool, there is a 90% probability that the Fed will follow September's sharp 50 bp rate cut with a more modest 25 bp cut. On 7 November, the probability is almost 90%. It has been made clear by officials at the Fed that any further sharp cuts to interest rates would require a weakening of the US labour market.

Furthermore, the next batch of US inflation data, namely the Consumer Price Index (CPI) for September, will be released on Thursday. It is anticipated that US core CPI will decline to 0.2% m/m from the previous reading of 0.3%, while annual inflation is expected to decline to 2.3% y/y from the previous reading of 2.5%.

Trade recommendation: Trading predominantly Buy orders from the current price level.

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