EURUSD Summary

The Euro strengthened against the US Dollar on Wednesday, after the release of US inflation figures. The headline CPI rose by 3.7% year-over-year in August, and 4.3% when it comes to the Core CPI. The USD weakened as a result, and the EUR/USD pair reclaimed the area above 1.0750.


Market Views & Opinions

Rabobank believes that the market is continuing to adapt to the view that Fed rates are set to be higher for longer, and as a result, they see scope for EUR/USD to edge towards 1.06 on a three-month view. They cite the weaker outlook for both Chinese and European growth as weighing on risk appetite and underpinning the safe haven Greenback. Rabobank expects the USD to hold firm into the start of next year and only soften as expectations for Fed rate cuts start to come into view.
The ECB is expected to maintain a pause in its current tightening cycle, according to UOB. The bank cites a lack of forward guidance from the ECB at its July meeting as well as a shift in language from an explicit tightening bias to a more neutral stance.
Commerzbank states that the inflation rate in August rose by half a percentage point to 3.7%. They say that while this gasoline price-related boost had been expected, the core inflation rate also turned out to be slightly higher than forecast, even though it declined further to 4.3%. Commerzbank believes that the Fed can probably pause next week but will take a close look at further price developments.



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