The Euro remains under pressure as we get enter todays European trading session while market participants await speeches by Federal Reserve officials that will be watched for further clues on interest rate policy and as investors monitored developments in the Middle East.
The main question now whether the U.S. central bank will hike interest rates again in November as it battles to bring inflation closer to its 2% target rate which to some still seems a long way off.
There is no denying that the aggressive rate hikes from the Fed have somewhat put the brakes on the US economy and more and more US Federal reserve board members are coming out in favour of a rate pause.
Chicago Fed President Austan Goolsbee said it is "undeniable" that the slowdown in U.S. inflation is a trend rather than a momentary blip, despite a recent string of economic data showing persistent pressure on some prices.
Philadelphia Fed President Patrick Harker said on Monday the current level of interest rates has nearly killed off access to the housing market for those looking to get in for the first time.
Fed Chairman Jerome Powell will speak on Thursday, during a busy week of speeches by regional bank heads then Fed officials will enter into a blackout period on Oct. 21 before the Fed's Oct. 31–Nov. 1 meeting.
At the same time, many in the financial markets are pondering the possibility of the European Central Bank (ECB) putting a halt to policy modifications, even though inflation levels exceed the bank's target and concerns are growing regarding the potential for a future economic downturn or stagflation in the region.
Looking further ahead today, the main drivers of the EUR/USD currency pair will be the release ZEW economic sediment index from Germany should paint a clear state of the business sector in Europe’s largest economy.
During the US trading session market participants will await the release of retail sales figures from the world’s biggest economy and the numbers will be closely monitored by Fed board officials as they decide on whether to hike interest rates next month.