Euro moves off daily lows

Published on 26.10.2023 13:33

The Euro (EUR) manages to regain some composure vs. the US Dollar (USD), inducing EUR/USD to trim part of the initial drop to the 1.0520 region on Thursday.

On the other hand, the Greenback gives away some of the earlier advance to three-week highs around 106.90 when tracked by the USD Index (DXY), amist some corrective move in US yields over divergent maturities.

The offered bias prevails around the single currency after the European Central Bank (ECB) matched expectations and left its interest rates unchanged at its event on Thursday. At its statement, the ECB reiterated that inflation is seen higher for longer, at the time when the Council stated that current rate levels must be maintained for a sufficiently long period.

At her press conference and Q&A session, ECB President Christine Lagarde acknowledged that the region's economy is anticipated to remain undermined in the forthcoming months, while structural reforms have the potential to lessen inflationary pressures. She added, that risks to growth are disproportionately inclined downward and discussions pertaining to interest rate deductions are premature at this juncture. Lagarde also reiterated that long term monetary policy determinations will continue to rely on incoming data and suggested that elevating yields constitute a spillover effect that must be considered due to its capacity to drive inflation downward.

Still around monetary policy, there is a growing consensus among market participants that the Federal Reserve (Fed) will maintain its current stance of keeping interest rates unchanged at the meeting on November 1. This view has been reinforced by remarks made by Fed Chair Jerome Powell in his recent speech at the Economic Club of New York on October 19.

Data-wise, in the US, the flash Q3 GDP Growth Rate expanded 4.9% YoY, weekly Initial Jobless Claims increased by 210K in the week ended on October 21, Durable Goods Orders expanded markedly by 4.7% MoM in September and preliminary Goods Trade Balance see a deficit of $85.78B also in September.