Euro Strong, Dollar Under Pressure: This Week Has Many Triggers
The euro opened the week on a positive note against the US dollar. In the European session on Monday (February 9th), EUR/USD held above 1.1850 and hovered around 1.1854 (+0.33%) today, as the dollar lost steam ahead of a busy week of US economic data releases.
The main pressure came from the dollar. The Dollar Index (DXY) fell to around 97.5 and weakened by around -0.27% in the past 24 hours, as the market increasingly focused on the Fed's interest rate decision, which could change if this week's jobs and inflation data soften.
Global sentiment is also "risk-on," which typically makes the dollar a safe haven less desirable. Furthermore, the landslide victory of Japanese Prime Minister Sanae Takaichi has led markets to view the Japanese government as more stable—the yen has recovered, and the ripple effect has put pressure on the dollar in several pairs. (Ultimately, the euro has also benefited.)
In Europe, the market is awaiting comments from ECB officials, including Christine Lagarde. But the message is expected to be similar to the last policy meeting: the ECB is likely to hold off while monitoring the data, so today's euro movement will be determined more by the "weak dollar" than any surprises from Frankfurt.
Meanwhile, in the US, speeches by several Fed officials could make the market even more sensitive, as their tone hasn't always been unified. So, until major data is released, the EUR/USD's direction will likely remain supported by this combination: a weakening DXY, increased risk-on sentiment, and the market continuing to "guess" when the next rate cut will be.
Source: Newsmaker.id
