EUR/USD declines to near 1.0840 on Middle East tension, Eurozone GDP data eyed

Source Fxstreet
  • EUR/USD marks losses as traders adopt cautious stance as Middle East tension heightens.
  • ECB’s Guindos stated that policy easing will be considered if inflation aligns with the central bank's 2.0% target.
  • Investors put bets on the speculation that the Fed could ease policy as inflation indicates cooling off.

EUR/USD moves lower during the European trading session on Monday, reaching near 1.0840. The prevailing risk-off sentiment, fueled by escalated geopolitical situation in the Middle East, is leading traders to favor the US Dollar (USD), creating downward pressure on the EUR/USD pair.

The Euro (EUR) is facing downward pressure following the European Central Bank (ECB) interest rate decision on Thursday. The ECB decided to maintain its Main Refinancing Operations Rate at 4.50% and the Deposit Facility Rate at 4.0%. Additionally, ECB governing council member Klaas Knot stated on Sunday that the central bank requires evidence of slowing wage growth in the eurozone before considering interest rate cuts.

However, market expectations for ECB rate cuts have increased, with bets on a 50 basis points (bps) reduction by June and a 140 bps cut by December 2024. On the data front, the quarterly Gross Domestic Product (GDP) for the Eurozone and Germany is scheduled for release on Tuesday.

European Central Bank (ECB) Vice President Luis de Guindos has stated that the ECB will consider cutting interest rates when there is confidence that inflation aligns with the central bank's 2.0% goal. He highlighted positive developments in inflation recently and indicated that these favorable trends would eventually be reflected in the ECB's monetary policy.

The US Dollar Index (DXY) maintains stability around 103.50, with subdued 2-year and 10-year US Treasury yields at 4.33% and 4.11%, respectively, at the time of writing. Investors are putting their bets on the speculation that the Federal Reserve (Fed) could implement policy easing as US Core Personal Consumption Expenditures Price Index (PCE) data indicates a cooling off of inflation.

Traders are anticipated to closely monitor crucial economic indicators, especially Tuesday's releases of the US Housing Price Index and Consumer Confidence figures, to gain additional insights into the market. This scrutiny is expected to intensify following the forthcoming Federal Open Market Committee (FOMC) statement on Wednesday.

 

Disclaimer: For information purposes only. Past performance is not indicative of future results.
placeholder
Gold ends three-week slide at the $4,400 line — eight straight days of ETF inflows vs a 5% 10-year and a 100 dollarSpot gold closed Friday at $4,378.39, up 0.84% on the day and about 0.8% for the week — its first weekly gain in four weeks — with the intraday high of $4,399.67 leaving it 33 cents shy of the $4,400 line. Gold ETFs have now logged eight straight sessions of inflows, but with the 10-year back above 5% and the dollar index near 100, here is what decides whether this is a reversal or a bounce.
Author  Suzie
Sep 20, Sun
Spot gold closed Friday at $4,378.39, up 0.84% on the day and about 0.8% for the week — its first weekly gain in four weeks — with the intraday high of $4,399.67 leaving it 33 cents shy of the $4,400 line. Gold ETFs have now logged eight straight sessions of inflows, but with the 10-year back above 5% and the dollar index near 100, here is what decides whether this is a reversal or a bounce.
placeholder
October hike odds climb toward 60% as Goldman and BofA both flip — what Warsh's "dose of accommodation" really changedRate futures now price roughly 55% to 62% for a 25bp hike at the October 27-28 FOMC, up from about 30% before Chair Warsh's post-meeting framing that the Fed is merely "removing some accommodation." Goldman Sachs has added an October hike to its forecast and Bank of America now sees moves in both October and December. Here is the repricing, the language behind it, and the two data points that decide it.
Author  Irene Q.
Sep 23, Wed
Rate futures now price roughly 55% to 62% for a 25bp hike at the October 27-28 FOMC, up from about 30% before Chair Warsh's post-meeting framing that the Fed is merely "removing some accommodation." Goldman Sachs has added an October hike to its forecast and Bank of America now sees moves in both October and December. Here is the repricing, the language behind it, and the two data points that decide it.
placeholder
Brent edges toward $99 as Trump rejects Iran's Hormuz proposal — why the war-risk premium won't rebuildBrent crude rose 0.92% to $98.51 and WTI gained 1.15% to $93.51 after President Trump rejected Iran's seven-day proposal to reopen the Strait of Hormuz. But both benchmarks remain about 12% below their early-September highs, because supply never actually stopped. Hormuz flows ran at 33.7 million barrels this week, in line with the prior week, and Saudi Arabia's East-West pipeline restarted on September 22.
Author  Suzie
Yesterday 06: 18
Brent crude rose 0.92% to $98.51 and WTI gained 1.15% to $93.51 after President Trump rejected Iran's seven-day proposal to reopen the Strait of Hormuz. But both benchmarks remain about 12% below their early-September highs, because supply never actually stopped. Hormuz flows ran at 33.7 million barrels this week, in line with the prior week, and Saudi Arabia's East-West pipeline restarted on September 22.
placeholder
Four jobs reports in five days: what JOLTS, ADP, claims and the September payrolls mean for the October Fed decisionThe US labour market faces its densest data week of the month. JOLTS job openings land Tuesday (7.2 million expected), ADP on Wednesday (70,000 expected), initial claims on Thursday and the September non-farm payrolls on Friday (100,000 expected, down from 162,000). Markets price a 64%-70% chance of another quarter-point Fed hike on October 28. The dollar index sits at 100.77 and the S&P 500 at 7,729.8.
Author  Mitrade
Yesterday 06: 33
The US labour market faces its densest data week of the month. JOLTS job openings land Tuesday (7.2 million expected), ADP on Wednesday (70,000 expected), initial claims on Thursday and the September non-farm payrolls on Friday (100,000 expected, down from 162,000). Markets price a 64%-70% chance of another quarter-point Fed hike on October 28. The dollar index sits at 100.77 and the S&P 500 at 7,729.8.
placeholder
RBA set to hike interest rate to 4.60% in September as inflation remains elevatedThe Reserve Bank of Australia (RBA) is widely expected to raise the Official Cash Rate (OCR) by 25 basis points (bps) to 4.60% from 4.35% on Tuesday, after keeping rates unchanged at its previous two meetings
Author  FXStreet
5 hours ago
The Reserve Bank of Australia (RBA) is widely expected to raise the Official Cash Rate (OCR) by 25 basis points (bps) to 4.60% from 4.35% on Tuesday, after keeping rates unchanged at its previous two meetings
Related Instrument
goTop
quote