Market bets on the Fed cutting rates faster than the ECB, with the Euro nearing its high for the year
Due to market expectations that the Federal Reserve will cut interest rates by more than the European Central Bank in the coming months, the euro rose slightly against the dollar to $1.1023, close to this year's high. Investors expect the U.S. to cut rates by 100 basis points in December, while the eurozone is expected to cut by 70 basis points. Franceso Pesole, a foreign exchange strategist at Rabobank, pointed out that the euro may enter a long-term uptrend, with a short-term target of rising to $1.12. Since early August, the euro has risen by about 2% against the dollar
Zhitong Finance APP noted that due to expectations that the Federal Reserve will cut interest rates more than the European Central Bank in the coming months, the euro has slightly risen to its highest level this year against the US dollar.
The euro rose 0.3% on Wednesday to $1.1023, its highest level since January 2nd, with the market awaiting US inflation data to further prove that the Fed may begin easing policy next month.
Currently, the currency market expects a 100 basis point rate cut in the US in December, compared to a 70 basis point cut in the eurozone. Despite the ECB cutting rates by a quarter point in June, traders believe the Fed may ultimately adopt a more aggressive easing policy, potentially cutting rates by half a point in September.
Franceso Pesole, a foreign exchange strategist at ING Group, stated that this marks the beginning of a "long-term upward trend" for the euro. "With narrowing interest rate differentials and stable risk sentiment, our target is for the euro to rise to $1.12 against the dollar in the short term."
The euro has risen by about 2% against the dollar since early August, following weaker-than-expected US July employment data, which increased traders' bets on a Fed rate cut. The euro is now only 0.3% away from this year's high of $1.1054