Euro demand is expected to increase, falling below 1.05 or attracting buyers!
The euro is leading the global foreign exchange rebound, and there are signs that the initial surge of the US dollar after Trump's election has lost momentum. After Federal Reserve Chairman Powell expressed doubts about the Fed's December interest rate cut, the EUR/USD rebounded from a low of 1.05 to 1.0577 and is currently trading at 1.0547.
Derek Halpenny, head of global market research for Europe, Middle East, and Africa at Mitsubishi UFJ Bank Limited, stated that the US dollar may enter a consolidation phase, suspecting that the positive momentum seen since and before the US election may now begin to fade.
Halpenny said, "The euro has fallen significantly against the US dollar in just over a month, and we may reach a time when the positive momentum fades and the market begins to see better two-way flow
The rise of the US dollar was driven by the rapid slowdown of the Federal Reserve's expectation of interest rate cuts, which widened the gap between the yields of US bonds and those of Eurozone bonds.
Michiel Tukker, Senior European Interest Rate Strategist at Dutch International, stated that Powell's speech was interpreted by the market as more hawkish, reducing the likelihood of a rate cut in December to below 50%.
He added, "Economic resilience will enable the Federal Reserve to make more cautious decisions. Although the latest inflation data is larger than the Fed's expected increase, it is clearly not in a hurry to cut interest rates
Mitsubishi UFJ's Halpenny stated that demand for the euro may increase around the current level.
He explained, "Based on our conversations with customers, our feeling is that for those who have a demand for Euro purchases, a level around 1.0500 or definitely below 1.0500 will be considered an attractive purchasing level
EUR/USD daily chart
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