Euro sticks to positive bias above 1.1400 vs USD; Mideast tensions cap gains
The EUR/USD pair attracts some buyers for the second straight day, though it lacks follow-through and remains confined within the previous day's range during the Asian session on Thursday. Spot prices currently trade around the 1.1420 area, up less than 0.10% for the day, and remain at the mercy of the US Dollar (USD) price dynamics.
The USD Index (DXY), which tracks the Greenback against a basket of currencies, remains on the defensive below the weekly top, touched on Wednesday, amid reduced expectations for Federal Reserve (Fed) rate hikes. Against the backdrop of last week's soft US Nonfarm Payrolls (NFP) report, the Minutes of the June 16-17 FOMC meeting revealed that policymakers noted high uncertainty about the outlook on interest rates.
However, Fed officials indicated that some policy firming would likely be warranted to return inflation to 2%. According to the CME Group's FedWatch Tool, traders are still pricing in around a 70% chance that the US central bank will raise borrowing costs in September. This, along with a fresh escalation of tensions between the US and Iran, acts as a tailwind for the safe-haven USD and acts as a headwind for the EUR/USD pair.
The US military unleashed a new wave of strikes against Iran in retaliation for Tehran’s attacks on commercial ships in the Strait of Hormuz. Iran retaliated by targeting approximately 85 US military installations and assets across Bahrain and Kuwait. Adding to this, US President Donald Trump said on Wednesday that the memorandum of understanding with Iran aimed at ending the conflict in the Middle East is now over.
Meanwhile, European Central Bank (ECB) rate hike bets have recently faced downward pressure in the wake of an unexpected fall in Eurozone inflation. This might hold back traders from placing aggressive bullish bets on the shared currency, which could further cap gains for the EUR/USD pair. Traders now look to the release of ECB Monetary Policy Meeting Accounts and the US Weekly Initial Jobless Claims for a fresh impetus.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
You may also like
Wall Street giants collectively raise rate hike forecasts, US Treasury futures continue to fall, gold drops over 1% to break 4000
After the US October CPI exceeded expectations, Goldman Sachs and Nomura added a forecast for an interest rate hike in March next year, while Deutsche Bank included a forecast for a rate hike in January next year. Currently, the market has fully priced in a 25 basis point rate hike in December, with a 13% probability for a 50 basis point hike. On Wednesday, the US Treasury spot market was closed, but Treasury futures continued to fall, with corresponding yields rising by about 2 to 4 basis points, and spot gold came under pressure, dropping by 1.1%.
No Need to Worry About the Cooling Down of AI Data Center Construction? The US Import Boom Is Unlikely to Subside in the Short Term, Real Impact May Come in 2029
It takes an average of 4.8 years from finalizing investment to starting construction of a data center project, and an additional 2.6 years from construction start to becoming operational. Servers usually cannot be installed until after the building structure and racks are completed. For trade partners such as Taiwan (China), South Korea, and Mexico who rely on US data center supply chain demand, the inertia in construction timelines provides at least a one- to two-year buffer for future exports.
Federal Reserve Major Debate: When Should the Tenure of “Number Three” Williams End?
The main point of contention is whether Williams should step down in June 2028, upon completing a full 10-year term, or in June 2027, when he reaches the mandatory retirement age of 65. Analysts point out that the Federal Reserve Board holds ultimate discretion; if he leaves early, Fed Chair Waller would be able to assert greater control over the appointment to this critical position. However, forcing Williams to shorten his term could easily be interpreted as political manipulation. Williams himself is expected to serve until June 2028.
Crypto prices
More
