The EUR/USD currency pair started the week on a slightly negative note, and is now hovering around 1.1730 area. This latest position represents the first overall long position in a pair. Still, it remains close to the all-time high level hit back in early October. On Thursday, the Euro hit this height, which shows extreme changes in risk capital, and various economic news released.
Currently, the EUR/USD currency pair is trading down just under 0.10% on the day after recovering off recent lows. Traders are judging where the economy stands. They’re assuming a better than even chance of at least two more Fed interest rate cuts next year. Anticipation is growing, spurred mainly by climbing concerns over a softening U.S. labor market. The latest data shows a reversal of that trend.
The always delayed Nonfarm Payrolls (NFP) report will hit the presses Tuesday. The market analysts expect that it will trigger new trends within the EUR/USD pair. Regardless, the NFP figures remain important, cutting to the heart of labor market health and our monetary policy choices. Bennett’s Guiding Light Traders are eagerly awaiting this release, as it could greatly affect their positions in dramatic ways.
This means the NFP report is just one piece of the puzzle. On Thursday, the next European Central Bank (ECB) meeting will add yet another layer of uncertainty to market dynamics. Traders are hesitating to take aggressive positions at the moment. They are willing to bide their time until the ECB makes its intentions clear regarding potential policy changes. The central bank’s stance on interest rates will be closely scrutinized, particularly given recent signals of caution from the US Federal Reserve.
The US central bank has indicated a go-slow approach on subsequent cuts. In another setback for climate action, they recently cut borrowing costs for the third time this year. President Donald Trump is just one step closer to filling the impending vacancy at the top of the central bank by choosing his Fed replacements. Not only would his nominee be delivering interest-rate cuts directly to the Fed, but those interest-rate cuts would likely have dramatic effects on currency valuations.
The heat map illustrates the directional and percent changes for all the major currencies. It shows a fragile progress, uncovering the intricate nature of economic exchanges around the world.