Is the Euro Quietly Pressuring the Dollar?
The EUR/USD pair traded flat on Thursday, trading around 1.1596, as market liquidity thinned during the US Thanksgiving holiday. Despite the limited movement, pressure on the US dollar remained as expectations mounted that the Federal Reserve would cut interest rates soon. The combination of declining inflation, weak retail sales data, and declining consumer confidence has made the market increasingly confident that borrowing costs in the US will fall.
According to the CME FedWatch Tool, the market now prices around an 85% chance of the Fed cutting interest rates by 25 basis points. This sentiment strengthened after several Fed officials, led by New York Fed President John Williams, spoke dovishly last week. However, the latest initial jobless claims data for the week ending November 21 surprised the market, as the number of Americans filing for unemployment benefits actually fell, contrary to expectations of an increase.
From the European side, data showed a slight improvement in Eurozone Consumer Confidence, with households becoming more optimistic and showing interest in shopping ahead of the Christmas season. However, European Central Bank (ECB) officials also remained cautious. One official, Kazaks, emphasized that now is not the right time to cut interest rates. As a result, both the Fed and the ECB have adopted a dovish tone, but expectations of a larger rate cut in the US give the euro the opportunity to end the week stronger against the dollar. (az)
Source: Newsmaker.id
