Skip to content EURUSD Fundamental Analysis – 24-September-2024
The EUR/USD currency pair fell to $1.11, a significant drop from its peak in early July 2023. This decline comes as there’s growing concern that the European Central Bank (ECB) may have to intensify its efforts to stimulate the economy, which is currently under pressure.
Economic Indicators Show Contraction
Recent economic data, including Flash PMIs from the Eurozone, Germany, and France, indicate a downturn. These reports reveal that private sector activities in these regions are shrinking.
Notably, the conclusion of the Olympics adversely affected France’s service industry, and ongoing issues within German automobile manufacturers, such as VW, further exacerbated the decline in manufacturing output.
Market Expectations and ECB’s Response
Market participants anticipate approximately 44 basis points of additional rate cuts from the ECB this year. There’s a 40% chance these cuts could begin as soon as October.
The ECB has already reduced interest rates by 25 basis points twice this year to combat slowing inflation and stagnant economic growth across the eurozone.
Anticipating ECB’s Next Moves
As inflation slows and economic growth remains tepid, the ECB’s hinted strategy of further rate reductions could be crucial for the eurozone’s recovery.
Investors and market watchers are closely monitoring these developments, as they could significantly impact the Euro’s value and the broader economic stability in the region.
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