The euro rose in the European market on Tuesday against a basket of global currencies, continuing to move in the positive territory for the second day in a row against the US dollar, as the recovery from a two-week low extends, benefiting from the decline in US currency levels ahead of Federal Reserve Chair Jerome Powell’s speech.
Following the latest hawkish meeting of the European Central Bank, the odds of European interest rate cuts until the end of this year have declined, and in order to confirm those odds, investors are awaiting at successive times today the release of data on the main sectors composing the European economy during September.
Price Overview
• Euro exchange rate today: The euro rose against the dollar by 0.15% to ($1.1820), from the opening price today at ($1.1803), and recorded the lowest level at ($1.1795).
• The euro ended Monday’s trading up by 0.5% against the dollar, in its first gain in the last four days, after earlier touching a two-week low at $1.1726.
US Dollar
The US dollar index fell on Tuesday by 0.1%, extending its losses for a second straight session, moving away from a two-week high at 97.82 points, reflecting the continued decline in US currency levels against a basket of global currencies.
Aside from correction and profit-taking, US dollar levels are weakening ahead of Federal Reserve Chair Jerome Powell’s speech later today, which is expected to include new evidence on the likelihood of additional US interest rate cuts during the remainder of this year.
European Interest Rates
• Sources: Policymakers at the European Central Bank believe there is no need for further interest rate cuts to achieve a 2% inflation rate, despite new economic forecasts pointing to lower interest rates over the next two years.
• Sources: Unless the eurozone is hit by another major economic shock, borrowing costs are expected to remain at current levels for some time.
• Money market pricing of the odds of the European Central Bank cutting interest rates by 25 basis points in October is currently stable around 10%.
• Traders have reduced their bets on ECB monetary easing, pointing to the end of this year’s rate-cutting cycle.
• In order to reprice those odds, investors are awaiting at successive times today the release of data on the main sectors composing the European economy during September.
Expectations for the Euro’s Performance
We at Economies.com expect: if the main sector data comes in more positive than currently expected in the markets, the odds of keeping European interest rates steady until the end of this year will be confirmed, which will support the euro’s rise in the foreign exchange market.
