Daily Digest Marlet Movers: EUR/USD juggles while US Dollar remains on back foot
- EUR/USD consolidates around 1.0950 ahead of the ECB policy outcome. The near-term outlook of the shared currency pair remains firm as the US Dollar (USD) remains vulnerable. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, seems fragile near a more than three-month low at 103.70.
- The US Dollar could see more downside amid firm speculation that the Federal Reserve (Fed) will start reducing interest rates from the September meeting. Upbeat expectations for Fed rate cuts have been prompted by easing price pressures and cooling labor market conditions. June’s Consumer Price Index (CPI) report showed that annual headline and core inflationary pressures decelerated at a faster-than-expected pace.
- Fed’s Beige Book, released on Wednesday, showed that firms witnessed moderate growth and slower labor demand from late May through early July. Recent employment data also showed that the Unemployment Rate rose to 4.1%, the highest since December 2021.
- Meanwhile, recent inflation figures have also boosted confidence of policymakers that inflation will return to the path of 2% target. On Wednesday, Fed Governor Christopher Waller communicated confidence over moderation in job market and inflation. When asked about rate cuts, Waller said, “I do believe we are getting closer to the time when a cut in the policy rate is warranted," Reuters reported
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