EUR/USD remains stronger near 1.1750 as US Dollar weakens, Germany's ZEW index surges
EUR/USD extends its gains for the third consecutive session, trading around 1.1730 during the Asian hours on Wednesday. The pair appreciates as the US Dollar (USD) continues to lose ground amid rising United States (US)–Greenland concerns.
US President Donald Trump said there is “no going back” on his ambitions regarding Greenland, alongside earlier threats to impose new 10% tariffs on eight European Union (EU) countries, fuelling concerns over slower economic growth. Additionally, Trump threatened a 200% tariff on French wines as President Emmanuel Macron refrained from joining Trump's "Board of Peace".
The European Parliament plans to suspend approval of the US trade deal agreed in July, with the decision set to be announced on Wednesday in Strasbourg, France. An escalation in US–Europe tensions.
The downside of the Greenback could be restrained as the latest US labor market data have pushed back expectations for further Federal Reserve (Fed) rate cuts until June. Fed officials have signaled little urgency to ease policy further until there is clearer evidence that inflation is sustainably moving toward the 2% target.
The Euro (EUR) receives support against its peers despite increased risk aversion, supported by stronger-than-expected German economic data. Germany’s ZEW Economic Sentiment Index surged to 59.6 in January, its highest since July 2021 and well above the 50 forecast, signalling optimism for a 2026 economic turnaround despite uncertainty over US trade policy.
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
Fed’s Hawkish Talons Shine, Bond Market Believes: US Treasury Yield Curve Flattens as Rate Hike Bets Heat Up
The bond market is showing increasing confidence that Federal Reserve Chairman Kevin Walsh will fulfill his commitment to curb inflation—currently, the inflation rate has exceeded policymakers' target level for five consecutive years.
"Hawkish Rate Hike"! Walsh's "Major Shift"
The Federal Reserve unanimously raised interest rates by 25 basis points in September, with Waller fulfilling his hawkish commitments through decisive action and making it clear that current financial conditions are not tight, and this hike only removes "some accommodation," using strong language. UBS believes that Waller's policy response function has undergone a substantial shift compared to his predecessor—he is more sensitive to inflation and supply shocks, less concerned about the labor market, and has set a higher threshold for restrictive policy. The risks are clearly tilted toward interest rates remaining elevated for a longer period.
CITIC Securities: The Fed's September rate hike meets expectations, oil prices become key to follow-up, another rate hike of 25bps possible within the year
The pace and extent of future interest rate hikes by the Federal Reserve largely depend on oil prices. According to CITIC Securities, the Federal Reserve is expected to raise interest rates by another 25bps within this year and may remain on hold next year.
The Federal Reserve "raised interest rates as expected," but the market is concerned about "how many more times will there be after this?"
Analysts believe that Walsh emphasized closely monitoring inflation trends, but with only one month of data before the October meeting, it is insufficient to establish a "trend" for judgment, so action is expected again in December. The dot plot shows that 16 officials anticipate one more rate hike this year, but with the 10-year US Treasury yield surpassing 5%, traders are betting on a tighter path than the official dot plot suggests.
Crypto prices
More
