- EUR/USD depreciates as the US Dollar advances on a steady Fed policy outlook.
- The US central bank indicated no rush to lower interest rates anytime soon.
- The Euro may find support as traders price in an end to ECB policy easing.
EUR/USD extends its losing streak for the third successive session, trading around 1.1770 during the Asian hours on Friday. The pair faces challenges as the US Dollar (USD) continues to attract buyers following the release of the United States (US) Weekly Initial Jobless Claims on Thursday. Traders await the German Producer Price Index (PPI) data for August due later in the day.
The US Department of Labour (DOL) released on Thursday, the number of US citizens submitting new applications for unemployment insurance declined to 231K for the week ending September 13. The latest print came in short of initial estimates of 240K and was lower than the previous week’s 264K (revised from 263K). Meanwhile, Continuing Jobless Claims shrank by 7K to 1.920M for the week ending September 6.
The US Dollar remains stronger after the Federal Reserve (Fed) delivered an expected rate cut on Wednesday but signaled no rush to lower borrowing costs quickly in the coming months. Fed Chair Jerome Powell pointed to growing signs of weakness in the labor market to explain why officials decided it was time to cut rates after holding them steady since December amid concerns over tariff-driven inflation.
The downside of the EUR/USD pair could be restrained as the Euro (EUR) may receive support from rising expectations of the European Central Bank (ECB) ending the rate cut cycle following the latest inflation figures.
ECB Vice President Luis de Guindos said that the central bank should follow a “very prudent” approach given the high uncertainty. Guindos added that the current rate is appropriate given inflation trends and the transmission of monetary policy. ECB Governing Council members Martins Kazaks and Gediminas Simkus said earlier this week that interest rates do not need further cuts at the moment, though they did not rule out a potential move in the future.
