Published on 11.01.2023 11:08

The Euro has is once again trading in a tight range against the greenback as we get ready to enter the European trading session and it is likely to stay this way until tomorrow when the latest inflation figures from the US hit the market which will more than likely dictate the size of the next interest rate hike from the US Federal Reserve.

Several Fed board members have come out in recent days in favour of a 25-basis point rate hike but have also retriated that this will be data dependent and that’s why tomorrow’s CPI release is so crucial as it may show that record inflation figures in the US are finally on the slide.

One of the other major indicators form the US, namely the jobs market revealed a slowdown in the number of jobs created while wage figures also disappointed. But it was a sharp contraction in U.S. service sector activity that ultimately convinced markets a material slowdown was now underway and the Fed could therefore afford to rest.

"The U.S. dollar started the week on the back foot, losing ground to other major currencies and approaching December’s lows. Investors have started pricing in a less aggressive stance from the Federal Reserve, following the release of jobs numbers on Friday that showed that, albeit unhurriedly, the US economy is starting to slow down," says Ricardo Evangelista, Senior Analyst at ActivTrades.

Looking further ahead today, there are no major economic releases from either side of the Atlantic so a quiet day is expected for the Euro/USD currency pair as market participants await the release of tomorrow’s inflation figures from the US.

The initial jobless claims figures may also garner some attention as investors look for added confirmation that there is indeed a slowdown underway in the US employment market.


FAQ