Home Daily Commentaries EUR/USD slides on economic concerns

EUR/USD slides on economic concerns

Daily Currency Update

The recent slide in EUR/USD has continued overnight, with the pair now nearing its lowest level since early August. The catalyst for this decline was a report from Reuters, which revealed that European Central Bank (ECB) policymakers are considering cutting interest rates more quickly than previously expected. This move is seen as a response to concerns about the Eurozone's economy stagnating. The potential for earlier-than-expected rate cuts has added significant pressure on the euro.

At the same time, expectations that the U.S. Federal Reserve will maintain a more measured pace, sticking to 25 basis point interest rate hikes, have strengthened the U.S. dollar. This divergence in monetary policy outlooks between the ECB and the Fed has been a key driver behind the euro's weakness in recent weeks.

As a result, EUR/USD has dropped to 1.0780, while GBP/EUR has risen to 1.2030, reflecting broader euro weakness.

Key Movers

There has been little data of note over the past 24 hours, so market attention is increasingly turning toward the upcoming U.S. General Election, now less than two weeks away. Polls indicate that Kamala Harris holds a narrow overall lead, but in the key swing states, which are crucial for determining the election outcome, Donald Trump appears to have the advantage. This positioning in the swing states has boosted his chances, with bookmakers now favoring the former President to win the White House.

This growing expectation of a Trump victory is contributing to the U.S. dollar's strength across the board this morning. In response, GBP/USD has slipped to 1.2970, reflecting the dollar's broader gains amidst heightened election uncertainty.

Expected Ranges

  • GBP/USD: 1.2900 - 1.3055 ▼
  • GBP/EUR: 1.1960 - 1.2055 ▲
  • GBP/AUD: 1.9380 - 1.9515 ▲
  • EUR/USD: 1.0735 - 1.0865 ▼

Written by

Jake Trask

OFXpert

As a Senior Corporate Client Manager, Jake and his team manage a diverse portfolio of 250 businesses to meet their varied foreign exchange needs. He enjoys untangling the complexities of foreign exchange dynamics, constantly striving to provide clients with the most informed insights and strategies to navigate these fluctuations successfully.