EURUSD Heads Towards 1.15 Amid Diminishing Chances of a December Fed Cut
The dollar is preparing for a positive close not only this week but also this month. The EURUSD pair is breaking local lows from mid-month today and is heading towards the 1.1500 level amid diminishing chances for interest rate cuts in the United States. The dollar is strengthening against every G10 currency today.
The probability of a rate cut in the US has decreased from around 90% before the last Fed decision to a level of nearly 60%. If next week’s data, such as the ISM indices or the ADP report, turn out positive, it could increase the Fed’s confidence regarding the state of the US economy and lead to further dollar strengthening. Moreover there are some signs that the EBC may be flexible in the near future which may mean that the interest rates may decrease in the next year.
Expectations for Fed cuts have decreased. The market now sees interest rate declines to around 3.0% by the end of this cycle, considering the effective rate (3.25% for the upper bound). Source: Bloomberg Finance LP, XTB
EURUSD is falling below the 1.1530 level today, breaking through the mid-month support. Just 3 sessions ago, the pair was closer to the 1.17 level, but currently, it seems that the 1.1500 level is within reach. Source: xStation5
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