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EUR/USD Struggles to Extend Rally Amid Mixed Fed Signals and Economic Data

Arslan Butt•Wednesday, November 15, 2023•1 min read

The EUR/USD currency pair faces challenges in building upon its substantial rally to the 1.0885-1.0890 zone, the highest since August 31, as it modestly retreats in Wednesday’s Asian trading session.

Currently hovering around 1.0870, the pair shows a marginal decline for the day, pausing its three-day winning streak. Yet, a significant corrective downturn appears elusive.

The US Dollar gains some traction, partially recovering from Tuesday’s fall to a one-week low, exerting pressure on the EUR/USD pair. Nevertheless, the dollar’s rise is tempered by increasing consensus that the Federal Reserve has concluded its rate-hiking cycle.

This belief is reinforced by recent US consumer inflation data, indicating a stable headline CPI in October and a slowdown in the annual rate from 3.7% to 3.2%, the smallest increase in two years.

Market reactions suggest a shift in expectations, with investors anticipating the Fed to maintain interest rates and potentially initiate rate cuts by May 2024. This outlook contributed to a notable overnight drop in US Treasury bond yields, potentially restraining dollar bulls from aggressive positions and thereby limiting the downside for the EUR/USD pair.

Hence, it would be wise to observe substantial selling follow-through before confirming a peak in spot prices and engaging in aggressive bearish bets. Market focus now shifts to the US economic calendar, including the release of the Producer Price Index (PPI), Retail Sales figures, and the Empire State Manufacturing Index in the early North American session.

These releases, along with US bond yields and overall market sentiment, are expected to influence the demand for the US dollar and provide new dynamics to the EUR/USD pair.

EUR/USD Live Chart

ABOUT THE AUTHOR See More

Arslan Butt

Index & Commodity Analyst

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.

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