English
The EUR/USD Pair Posts Modest Gains Beneath The 1.0900 Threshold As The US Dollar Weakens
The EUR/USD pair begins the week on a positive note due to the USD's weakness. A week ago, the probability of a Fed rate cut at its March meeting was 81%; that figure has since decreased to 49.3%. At its January meeting, the European Central Bank (ECB) is anticipated to maintain the interest rate unchanged. This week will feature the ECB rate decision, US GDP (Q4), and US Core PCE data.
Monday morning during Asian trading hours, the EUR/USD pair posts modest gains beneath the 1.0900 barrier. Traders will closely monitor the January monetary policy meeting of the European Central Bank (ECB), which is scheduled for Thursday. The EUR/USD is trading at 1.0897 at press time, an increase of 0.03% on the day.
The markets are less convinced that the Federal Reserve (Fed) will reduce interest rates in March following last week's positive US economic data, which included Retail Sales and the Consumer Sentiment Index. The CME FedWatch Tool indicates that the probability of a reduction at the March meeting has decreased from 81% a week ago to 49.3%.
Conversely, members of the ECB Governing Council exercise prudence in regard to the imprudent relaxation of financial conditions. It does not expect any changes at its policy meeting for January on Thursday. However, traders will be more influenced by ECB President Christine Lagarde's post-meeting speech, regardless of whether she affirms the initial rate reductions of the year. Investors hold the belief that the ECB will commence interest rate reductions in the spring, given that the sustained advancement towards the 2% inflation target is predicated on the enforcement of more stringent real policy rates.
The monetary policy decision of the ECB is scheduled to be disclosed on Thursday; no policy adjustment is anticipated. On Thursday, the preliminary annualized gross domestic product (Q4) for the United States is also expected. The Commerce Department is scheduled to disclose the December reading of the Personal Consumption Expenditures Price Index (PCE), a preferred inflation gauge of the Federal Reserve, on Friday.
Bonus rebate to help investors grow in the trading world!
