The EUR/USD pair is rising to approximately 1.1525 during the early European trading session on Monday.
Fed's Williams mentioned there is still space for more changes to interest rates.
The ECB's careful approach helps keep the Euro stronger compared to the US Dollar.
The EUR/USD pair is trading above 1.1525 early on Monday in European markets. The US Dollar is slightly weakening against the Euro as there is growing hope that the Federal Reserve might lower interest rates. Traders are waiting for the release of the US September Producer Price Index and Retail Sales data on Tuesday.
Traders are increasing their bets that the Fed will cut rates in December after New York Fed President John Williams made more gentle comments. This has affected the value of the US dollar. Williams said on Friday that he thinks the US central bank will lower its main interest rate soon, because a weak job market is a bigger problem than high inflation. The chance of a rate cut next month went up to 70% on Monday, up from 40% the week before, according to the CME FedWatch Tool.
At the same time, a number of Federal Reserve officials gave careful remarks. Susan Collins, the president of the Boston Fed, mentioned she would set a high standard before backing more interest rate cuts. Lorie Logan, president of the Dallas Fed, added that without clear proof showing the need for more easing, keeping rates the same for a while would help the FOMC better understand how tight current policies are.
The European Central Bank (ECB) is expected to keep interest rates the same until the end of 2025 and possibly into 2026. This comes after they kept rates steady during their October meeting. A survey of economists in November also supports this idea, saying the economy is looking stable and inflation remains under control.
ECB President Christine Lagarde mentioned on Friday that the central bank will stay watchful for inflation risks and may change interest rates, if necessary, to maintain the 2% inflation target. The ECB's careful approach might offer some positive impact on the EUR relative to the JPY in the coming weeks.
Fed's Williams mentioned there is still space for more changes to interest rates.
The ECB's careful approach helps keep the Euro stronger compared to the US Dollar.
The EUR/USD pair is trading above 1.1525 early on Monday in European markets. The US Dollar is slightly weakening against the Euro as there is growing hope that the Federal Reserve might lower interest rates. Traders are waiting for the release of the US September Producer Price Index and Retail Sales data on Tuesday.
Traders are increasing their bets that the Fed will cut rates in December after New York Fed President John Williams made more gentle comments. This has affected the value of the US dollar. Williams said on Friday that he thinks the US central bank will lower its main interest rate soon, because a weak job market is a bigger problem than high inflation. The chance of a rate cut next month went up to 70% on Monday, up from 40% the week before, according to the CME FedWatch Tool.
At the same time, a number of Federal Reserve officials gave careful remarks. Susan Collins, the president of the Boston Fed, mentioned she would set a high standard before backing more interest rate cuts. Lorie Logan, president of the Dallas Fed, added that without clear proof showing the need for more easing, keeping rates the same for a while would help the FOMC better understand how tight current policies are.
The European Central Bank (ECB) is expected to keep interest rates the same until the end of 2025 and possibly into 2026. This comes after they kept rates steady during their October meeting. A survey of economists in November also supports this idea, saying the economy is looking stable and inflation remains under control.
ECB President Christine Lagarde mentioned on Friday that the central bank will stay watchful for inflation risks and may change interest rates, if necessary, to maintain the 2% inflation target. The ECB's careful approach might offer some positive impact on the EUR relative to the JPY in the coming weeks.
