Home Forex EUR/USD saw modest gains below the 1.0900 barrier on a softer US dollar

EUR/USD saw modest gains below the 1.0900 barrier on a softer US dollar

by SuperiorInvest


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  • EUR/USD starts the new week positive on a weaker USD.
  • The odds of a Fed rate cut at the March meeting fell to 49.3%, down from 81% a week ago.
  • The European Central Bank (ECB) is expected to leave interest rates unchanged at its January meeting.
  • The focus this week will be on ECB rate decisions, US GDP (Q4) and US Core PCE data.

The EUR/USD pair made modest gains below the 1.0900 barrier during early Asian trading hours on Monday. The January monetary policy meeting of the European Central Bank (ECB) will be a closely watched event for traders on Thursday. At press time, EUR/USD is trading at 1.0897, up 0.03% on the day.

Markets are less confident that the Federal Reserve will cut interest rates in March after last week’s US economic data, including the retail sales index and consumer sentiment, showed an improvement in the US economy. According to the CME FedWatch Tool, the odds of a cut at the March meeting fell to 49.3%, down from 81% a week ago.

On the other hand, members of the Governing Council of the ECB are cautious about premature easing of financial conditions. No change is expected at Thursday’s January policy meeting. However, after the meeting, traders will take further cues from ECB President Christine Lagarde’s speech on whether she will confirm the first rate cut of the year. Investors believe that the ECB will start cutting interest rates rates in the spring as sustained progress towards the 2% inflation target is driven by the introduction of tighter real monetary policy rates.

The ECB a monetary policy decision will be announced on Thursday, with no change in policy expected. Also preliminary American Gross domestic product Annualized (Q4) will be due on Thursday. On Friday, the Commerce Department will release December’s reading of the personal consumption expenditures (PCE) price index, the popular Fed inflation meter.

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