The EUR/USD currency pair is experiencing an upward trend, currently hovering around the 1.1140 mark during the early hours of Thursday’s Asian trading session. This increase can be attributed to a general weakness in the US dollar, influenced by dovish signals from multiple officials of the Federal Reserve earlier in the week. Analysts from HSBC have projected that the European Central Bank (ECB) may implement a series of rate cuts, lowering rates by 25 basis points at each meeting between October and April of the following year.
As traders monitor the situation, all eyes are on the upcoming speeches from key Fed officials, including Chair Jerome Powell. Additionally, market participants are preparing for the release of several important US economic indicators, including the weekly Initial Jobless Claims, Durable Goods Orders, and the final Gross Domestic Product annualized figure for the second quarter.
The anticipation surrounding these events is palpable, as expectations rise for potential substantial rate cuts by the Fed. Analysts are particularly focused on the November meeting, where some speculate that further reductions could be on the table if signs of ongoing labor market weakness continue. Recent comments from Chicago Fed President Austan Goolsbee emphasized the importance of timely action to ensure a soft landing for the economy. In contrast, other officials have suggested that a hasty approach to rate reductions may not be necessary.
Compounding this situation, the latest survey data revealed a significant contraction in Eurozone business activity, sparking discussions about the likelihood of ECB rate cuts. HSBC’s forecast underscores this perspective, emphasizing the need for action in light of deteriorating economic conditions. As market sentiment evolves, traders will remain vigilant for any additional signals from the Fed that could further influence the EUR/USD exchange rate.
