US dollar strengthened thanks to cautious remarks by Fed officials | 21 November 2024

Event to watch out for today:

15:30 EET. USD - Unemployment Claims

EURUSD:

The Euro-dollar pair gained slightly after losses in the previous session, trading around 1.0550 during Asian hours on Thursday. However, the pair's gains may be tempered by safe-haven flows amid escalating geopolitical conflict between Russia and Ukraine.

Reuters reported that Ukraine fired a salvo of British Storm Shadow cruise missiles at Russian territory on Wednesday, marking the latest use of Western weapons against Russian targets. Moscow said the use of Western weapons to strike Russian territory far from the border would significantly escalate the conflict.

European Central Bank (ECB) Governing Council member Yannis Stournaras said on Wednesday that the eurozone is close to sustainably achieving its 2% inflation target. Stournaras emphasized the responsibility of policymakers to keep inflation from falling below that target, Bloomberg reported.

Meanwhile, the EU Financial Stability Review noted that escalating geopolitical tensions and policy uncertainty are increasing the vulnerability of sovereign states, while growing global trade disputes are raising the risk of economic turmoil.

The ECB has cut rates three times since June as inflation approaches the 2% target. However, growth forecasts have been revised downward twice. Markets widely expect a 25 basis point rate cut next month, with a lesser likelihood of a more substantial cut.

The US Dollar (USD) received support from cautious remarks from Federal Reserve (Fed) officials. FRB Boston President Susan Collins said on Wednesday that while further interest rate cuts are necessary, policymakers should proceed cautiously to avoid moving too fast or too slow, according to data compiled by Bloomberg.

Trading recommendation: Watch the level of 1.0550, if the level is fixed above consider Buy positions, if the level rebounds consider Sell positions.

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