EUR/USD Drops Ahead of US Growth & Inflation Updates
EUR/USD Analysis
Fears of recession have led to a pullback in market pricing around the Fed's tightening path, which along with fresh hawkish commentary by ECB officials and an improvement in broader sentiment, allowed the pair to stage a relief rally from its twenty years low on Wednesday.
CME's FedWatch Tool still projects another 75 basis points hike in November and 50 bps in December, but now assigns lower probabilities of 58.5% and 55.9% respectively, at the time of writing. [1]
On the European Central Bank front, Mr Kazimir backed another 75 basis points hike for the next meeting adding that poicy makers have to be "vigorous, even ruthless, regardless of the looming recession" according to Reuters. [2]
Today however, sentiment takes another nosedive, as markets brace for the updated US GDP figure, while on Friday we expect the PCE Inflation report, which can determine the pair's trajectory and spark volatility.
As such, yesterday's rally falters and EUR/USD slumps again today, after its failure to tackle key 38.2% Fibonacci of the September high/low plunge. This can lead to fresh twenty years low towards 0.9483, although sustained sub-0.9390 moves, have a higher degree of difficulty in the near term.
The common currency managed to close Wednesday above the EMA100 and has not lost all hope for another push to 0.9790, but it will need help from the economic data for that. At this stage though, ascending prospects appear limited and we struggle to see how it can post a more significant recovery towards mid-09900s.
Nikos Tzabouras
Senior Financial Editorial Writer
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. With extensive experience in market analysis and a strong foundation in international relations, he brings a unique perspective to financial markets. Nikos emphasizes not only technical analysis but also on fundamentals and the growing influence of geopolitics on financial trends.
As a Senior Financial Editorial Writer, he delivers comprehensive and forward-looking insights across a wide range of asset classes, including equities, commodities, and currencies. His work explores how macroeconomic events, political developments, and global policies impact market dynamics, providing readers with a deeper understanding of both short-term movements and long-term trends.
Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed here.