EURUSD – Up
Event to pay attention to today:
17:00 EET. USD – ISM Manufacturing PMI
EURUSD:
EUR/USD is under some pressure at 1.0530 on the back of a stronger US Dollar (USD) in the early hours of Asian trading on Monday. Investors will be closely watching the speech by European Central Bank (ECB) President Christine Lagarde and the release of the ISM US Manufacturing Purchasing Managers‘ Index (PMI) due later on Monday.
Eurozone inflation, as measured by the harmonized consumer price index (HICP), rose to 2.3% y/y in November from 2.0% in October, in line with market expectations. This figure exceeded the ECB’s target level of 2.0%. Meanwhile, the core HICP rose by 2.8% y/y in November, up from 2.7% in the previous reading, which was also in line with expectations.
Market participants expect a 25 basis points (bps) ECB rate cut in December, which would mark the fourth rate cut this year. However, expectations for a significant 50 bps rate cut have diminished since last month amid a slight increase in the Eurozone’s economic growth forecast. The expectation that the ECB will cut interest rates at its December meeting is weighing on the Euro (EUR).
On the other hand, the US Federal Reserve’s (Fed) cautious stance may continue to support the dollar. According to the CME FedWatch Tool, the probability that the Fed will cut rates by a quarter point in December is almost 65.4%.
Trade recommendation: Watch the level of 1.0530, when fixing below consider Sell positions, when rebounding consider Buy positions.
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