Published on 30.11.2022 11:08

The Euro is sitting tight against the US dollar as we get ready to enter today’s European trading session and with a range of economic data due out from both sides of the Atlantic the EUR/USD currency pair is expected to face major volatility.

From the Eurozone market participants will await the release of the latest inflation figures from France and the Eurozone as a whole and a strong performance will set the stage next month for a 75 basis point rate hike from the European central bank.

Also from Europe will see the release of the unemployment rate from Germany which is expected to hit the market at 5.5 percent, which is unchanged from last month.

During the American session the focus will be on the release of the GDP figures from the US which is expected to come in at 2.6 percent and may decide the size of the rate hike next month from the US Federal Reserve.

The highlight of today’s trading session will be a monetary speech towards the end of the day to be delivered by US Fed boss Jerome Powell where he is expected to lay out the state of the US economy including the all-important jobs market.

Powell’s inflation expectations will also be closely monitored, and we may see the US dollar receive a boost if there are indications there are no end to the rate hikes in sight.

Rising inflation in the US is the main reason the dollar has found so much strength this year and over the last month there has been a slight reduction which has lead to predictions that the Fed may start to reduce the size and timing of their rate hikes as the US economy is beginning to cool.

Not everybody is convinced however and analysts from UBS say that inflation in the US has not run its course and people may be jumping the gun to say the Fed has reigned it in with the amount of rate hikes so far.

“The decline in US inflation may be less smooth than investors appear to be assuming, and setbacks on inflation could revive concerns over the extent of monetary tightening. Downside risks for the global economy could also cause renewed safe-haven flows into the Dollar.” they said.

“a further burst of strength is likely in the coming months. We expect the Euro to fall back to 0.96 versus the US Dollar by March, down from 1.04 at present.” they added.

 


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