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by EUR/USD—The Euro rose to $1.085 in the last week of May, approaching the two-month highs seen earlier in the month. This rise comes as traders adjusted their expectations for an interest rate cut by the European Central Bank (ECB). Investors now predict an 88% chance that the ECB will reduce rates in its upcoming monetary policy meeting next week.
EURUSD Fundamental Analysis – May-29-2024
EURUSD Fundamental Analysis – May-29-2024
However, there are doubts about further cuts beyond June. Traders now expect only one more reduction in interest rates. The ECB’s Chief Economist told the Financial Times that while the central bank is ready to cut rates in June, it must keep a restrictive policy stance throughout the year. This is because wage growth is not expected to normalize until 2026.
In the first quarter, negotiated pay surged 4.7% compared to a year ago, approaching record levels last seen in Q3 2023. Additionally, the Purchasing Managers’ Index (PMI) readings indicated that private sector activity grew the most in a year in May, driven by faster increases in new orders and employment.
As the ECB prepares for its next meeting, the market remains focused on its decisions and the economic indicators that will shape its policies. Investors should stay informed about these developments to make well-informed financial decisions. (Source Bloomberg)
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