- EUR/USD remains steady as traders adopt caution after Trump signed the government funding bill.
- The US Dollar remains subdued amid uncertainty surrounding the US economic outlook and the Fed policy direction.
- ECB’s Isabel Schnabel remarked that interest rates are “absolutely” at an appropriate level.
EUR/USD moves little after six days of gains, trading around 1.1590 during the Asian hours on Thursday. The pair remains steady as the US Dollar (USD) holds ground after US President Donald Trump signed the government funding bill on Thursday, marking the official end of the record 43-day government shutdown in the United States (US) history.
The US Dollar remains silent amid an uncertain US economic outlook and Federal Reserve (Fed) policy outlook. Weaker-than-expected private labor data for October strengthened expectations of potential Fed policy easing, as the ADP Employment Change report on Tuesday indicated an average weekly job loss of 11,250 in the four weeks to October 25. Moreover, Challenger, Gray & Christmas announced that US employers slashed 153,074 jobs in October, up from the 55,597 cuts announced in October 2024.
However, the likelihood of the Federal Reserve (Fed) rate cut in December faded following recent hawkish Fedspeak. The CME FedWatch Tool shows markets pricing in nearly a 60% chance of a 25-basis-point Fed rate cut in December, down from 67% a day ago.
Atlanta Fed President Raphael Bostic addressed economic trends at the Atlanta Economic Club on Wednesday. Bostic cautioned that easing policy too soon could “feed the inflation beast,” while noting that a sharp downturn in the labor market is unlikely in the near term. Meanwhile, Boston Fed President Susan Collins said that “Elevated inflation warrants still mildly restrictive policy,” adding that she has not seen “an increase in downside employment risks since the Summer.”
The EUR/USD pair may continue its winning streak as the Euro (EUR) receives support from a cautious European Central Bank (ECB) policy outlook. The ECB is expected to keep interest rates unchanged for now, backed by steady economic performance and inflation near target.
ECB Executive Board member Isabel Schnabel stated on Wednesday that there is no need to adjust interest rates under current conditions, emphasizing that the central bank’s primary focus remains on core inflation. Schnabel added that interest rates are “absolutely” at an appropriate level, while noting that food-price inflation remains relatively strong.
