Event to watch out for today:
15:30 EET. USD – Unemployment Claims
EURUSD:
The Euro-dollar pair is down to 1.0370 during Asian trading on Thursday. A hawkish rate cut by the US Federal Reserve (Fed) boosts the US Dollar (USD) and leads the major pair lower. Later on Thursday, the US will release weekly data on initial jobless claims, existing home sales, and final annualized gross domestic product data for the third quarter (Q3).
As expected, the Fed cut rates by 25 basis points (bps) at its December meeting on Wednesday, bringing the benchmark lending rate to a range of 4.25%-4.50%, a two-year low. The summary of economic projections, or “dot plot,” showed only two rate cuts in 2025, down from the four projected in September.
During the press conference, Fed Chairman Jerome Powell signaled that the Fed would be cautious about further rate cuts as inflation remains above the central bank’s 2 percent target. The expectation of a slower pace of Fed rate cuts next year provides some support for the dollar against the euro (EUR).
On the other hand, investors expect the European Central Bank (ECB) to cut interest rates at every meeting until June 2025 as policymakers are concerned about growing economic risks in the Eurozone. The expectation of aggressive rate cuts by the ECB could further undermine the common currency.
Trading recommendation: Trade predominantly with Sell orders from the current price level.
Origin: FreshForex
