Euro Weakens Slightly, Dollar Slowly Rebounds, Trend Reversal or Just a Breather?
The EUR/USD currency pair started the week on a slightly weaker note in the Asian session, trading around 1.1730, down less than 0.10% intraday. Despite the correction, the euro remains near its highest level since early October, touched last Thursday, so selling pressure has so far been limited.
The US dollar (USD) is seen strengthening slowly after previously falling to a more than two-month low. This rise is more of a technical rebound than a major trend change, as market expectations remain tilted toward a dovish Fed. The US central bank recently cut interest rates for the third time this year, and while signaling a more cautious outlook, market participants still expect two more cuts next year, amid signs of a weakening labor market.
Political factors are also holding back the dollar's strength. US President Donald Trump has said he has narrowed down the candidates to replace Jerome Powell as Fed Chair and wants someone who will push for lower interest rates. White House economic adviser Kevin Hassett has been mentioned as a strong candidate. Expectations of a "Trump-friendly Fed" and a tilt toward lower interest rates have made market participants hesitant to aggressively buy the dollar.
On the other hand, the euro received support from the view that the European Central Bank (ECB) may have finished cutting interest rates. However, traders chose to hold back ahead of the ECB's crucial meeting on Thursday. The market is awaiting signals on whether the ECB will actually confirm a pause in interest rate cuts or strike a more cautious tone regarding the European economic outlook.
Furthermore, the delayed US Nonfarm Payrolls (NFP) report, due for release on Tuesday, is also a key focus. This employment data could alter market expectations regarding the Fed's interest rate path and move EUR/USD sharply. For now, the pair remains within a narrow range, with the euro supported by expectations of a "stop-cut" ECB, while the dollar only managed to recover slowly amid the shadow of a persistently dovish Fed and political pressure from Trump. (asd)
Source: Newsmkaer.id
