14 October 2024, EUR/USD
EURUSD:
The Euro-Dollar pair extended declines to the 1.0920 level in the early Asian session on Monday. Risk aversion amid rising geopolitical tensions in the Middle East and conflicts between China and Taiwan is putting selling pressure on risky currencies such as the Euro (EUR).
On Monday, a US State Department spokesperson said that they have “serious concerns about People's Liberation Army (PLA) military exercises in the Taiwan Strait and around Taiwan”. They also said they would monitor the PRC's actions and coordinate with allies and partners on our shared concerns. Any signs of escalating tensions could increase safe-haven flows, which would favor the U.S. dollar and weigh on the major pair.
Traders expect a 25 basis points (bps) Federal Reserve (Fed) rate cut in November following the release of the U.S. Producer Price Index (PPI) on Friday. The CME FedWatch tool showed that the probability of a 25 bps Fed rate cut is almost 86.8%, up from 83.3% before the PPI data was released.
Overseas, the euro is under some pressure as the European Central Bank (ECB) is expected to cut interest rates further at both of its remaining monetary policy meetings this year. The ECB's softer stance has been reinforced by a faster-than-expected decline in Eurozone inflationary pressures and a “fragile” economic recovery.
Trading recommendation: Trade mainly with Sell orders from the current price level.
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