EUR/USD Continues to Under Pressure, What's Holding Back the Euro's Strengthening?
The EUR/USD currency pair continued its decline for the fifth consecutive session on Tuesday morning, trading around 1.1510 during the Asian session. This decline occurred in line with the strengthening of the US dollar, which was supported by cautious sentiment regarding the Federal Reserve's (Fed) December policy. Fed Chairman Jerome Powell stated that a further interest rate cut in December remains uncertain, although the market had previously priced in a higher chance of a rate cut. Traders have now lowered their expectations, with the chance of a December rate cut dropping to 65%, from 94% a week ago.
Meanwhile, despite the strengthening of the US dollar, the EUR/USD pair remained relatively unchanged due to market expectations favoring the euro. The European Central Bank (ECB) is expected to hold interest rates unchanged this year, providing some support for the euro. The ECB recently kept interest rates unchanged for the third consecutive time in October, indicating that inflation and Eurozone economic growth remain stable. Previous data showed Eurozone inflation slightly above the 2% target, while third-quarter GDP growth was better than expected.
However, the euro still faces several challenges, including global uncertainty and concerns about future ECB policy developments. Although Latvian Central Bank Governor Martins Kazaks stated that risks to inflation and growth in the Eurozone are now more balanced, markets remain wary of the ECB's potential reaction if economic conditions change. As a result, despite the support for the euro, EUR/USD remains vulnerable to the influence of a strong US dollar and political uncertainty in the US. (az)
Source: Newsmaker.id
