- EUR/USD weakens to around 1.0850 in the Asian session on Thursday.
- Traders expect the Fed to proceed with modest interest rate cuts over the next year.
- The ECB is widely expected to cut interest rates at its October meeting on Thursday.
The EUR/USD pair extends its decline to near 1.0850 during the early Asian session on Thursday. The increased strength of the Dollar puts some selling pressure on the pair. Investors will closely monitor the European Central Bank’s (ECB) monetary policy meeting, which is expected to cut interest rates again on Thursday.
The Federal Open Market Committee (FOMC) at its September meeting took the unusual step of reducing its benchmark interest rate by half a percentage point to a target range of 4.75% to 5.00%. However, investors now anticipate that the Federal Reserve (Fed) will proceed with modest interest rate cuts over the next year, broadly supporting the dollar.
Fed Governor Christopher Waller said Monday that future interest rate cuts will be less aggressive than September’s big move, as he worries the economy may still be running at a higher pace than expected. Later on Thursday, investors will take further cues from US retail sales data, which is expected to rise from 0.1% in August to 0.3% in September.
Across the Atlantic, the ECB is likely to make its third rate cut of the year at its October meeting, with money markets almost fully pricing in three additional rate cuts through March 2025. ECB President Christine Lagarde , said last month that the latest developments had strengthened the ECB’s confidence that inflation will return to target in due course and said this would be taken into account in October. Dovish comments from ECB policymakers and weaker-than-expected inflation in the Eurozone could weigh on the Euro (EUR) against the US Dollar (USD).
The Euro FAQs
The Euro is the currency of the 19 countries of the European Union that belong to the eurozone. It is the second most traded currency in the world, behind the US dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of more than $2.2 trillion per day. EUR/USD is the most traded currency pair in the world, accounting for an estimated 30% of all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2 %).
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
