Wednesday, February 28, 2024
HomeBusinessEUR/USD hovers around 1.0900 amid falling inflation, focus on ECB’s Lagarde’s speech

EUR/USD hovers around 1.0900 amid falling inflation, focus on ECB’s Lagarde’s speech


  • EUR/USD finds support above 1.0900 on the softer Eurozone inflation data.
  • Eurozone HICP eased to 2.4% YoY in November vs. 2.9% prior, the slowest annual pace since July 2021.
  • Markets anticipate the Fed won’t raise rates at any of its upcoming meetings and might start cutting rates in the middle of 2024.
  • Investors await ECB President Lagarde’s speech, US ISM Manufacturing PMI on Friday.

The EUR/USD pair hovers around the 1.0900 psychological mark after retracing from the multi-month high of 1.1017 during the early Asian trading hours on Friday. Falling inflation and a stagnant economy in the Eurozone fuel hopes that interest rates could soon be cut. Nonetheless, the weaker US Dollar (USD) might cap the downside of the pair. The major pair currently trades around 1.0902, up 0.16% on the day.

Data from Eurostat revealed on Thursday that inflation in the eurozone, as measured by the Harmonized Index of Consumer Prices (HICP) eased to 2.4% YoY in November from 2.9% in the previous reading, the slowest annual pace since July 2021. On a monthly basis, the inflation figure dropped 0.5% versus a 0.1% rise previously. The main drivers for the slowing in HICP were falling energy costs and lower growth in food and service prices.

The Eurozone inflation report has spurred investors on speculation that the European Central Bank will begin cutting its deposit rate as soon as next April. However, ECB President Christine Lagarde cautioned this week that it was not the time to start declaring victory as wage pressures remain strong.

Across the pond, the markets anticipate the likelihood that the Federal Reserve (Fed) won’t raise rates at any of its upcoming meetings and might start cutting rates in the middle of 2024. This, in turn, weighs on the US Dollar (USD) and acts as a tailwind for the EUR/USD pair.

About the data, the US Core Personal Consumption Expenditures Price Index (core PCE), rose 0.2% MoM and 3.5% YoY in October, in line with the expectation. Meanwhile, the Initial weekly Jobless Claims rose to 218K from the previous period week of 211K, below the 220K estimated. The Continuing Claims surged to 1.93 million, the highest level since November 27, 2021.

Market participants will keep an eye on ECB President Lagarde’s speech on Friday for fresh impetus. In the American session, the US ISM Manufacturing PMI for November will be released and Fed Chair Jerome Powell is set to speak.


Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.


RELATED ARTICLES

LEAVE A REPLY

Please enter your comment!
Please enter your name here

LAST NEWS

Featured NEWS