- EUR/USD records a modest recovery from the multi-week low reached this Thursday.
- Expectations of a Fed rate cut and the strong rebound in demand for the Yen caused profit taking in the Dollar.
- A softer risk tone should halt USD losses and cap the pair amid dovish ECB rhetoric.
The EUR/USD pair is attracting some buyers near the 1.0750 region, its lowest level since November 14 touched earlier this Thursday and, for now, appears to have broken a six-day losing streak. The pair is holding on to modest intraday gains around the 1.0780 region during the European session amid a weaker US Dollar (USD), although it lacks bullish conviction.
The dollar’s decline from two-week highs reached on Wednesday could be attributed to profit-taking on dovish expectations from the Federal Reserve (Fed). On the other hand, the strong rebound in demand for Japanese Yen (JPY) is another factor that weighs on the Dollar. That being said, an overall weaker tone around the stock markets should help limit the safe-haven Dollar’s losses and cap any significant upside move in the EUR/USD pair.
On the other hand, the moderate rhetoric of the authorities of the European Central Bank (ECB) could curb bullish expectations regarding the common currency. ECB board member Isabel Schnabel said Tuesday that the central bank may rule out further rate hikes given the notable drop in inflation and rising rate cut expectations. In fact, markets are pricing in the possibility of a cumulative 142 basis point rate cut in 2024, which should cap the EUR/USD pair.
In economic data, German industrial production – the Eurozone’s economic engine – fell 0.4% in October, compared to estimates of a 0.2% drop and -1.3% the previous month. Market participants are now looking to the release of weekly US initial jobless claims data to gain some momentum during the early part of the American session, although attention will remain focused on Friday’s NFP report. Meanwhile, the aforementioned mixed fundamental background makes it prudent to wait for strong follow-through buying before confirming that the recent sharp pullback from the 1.1015 area, or three-month highs touched in November, is over.
Technical levels to monitor
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.
