Skip to content EURUSD Fundamental Analysis – May-10-2024
The Euro has reached a one-month high, crossing the $1.077 mark (EURUSD). This significant appreciation reflects a shift in investor sentiment as they adjust their expectations regarding the monetary policies of major central banks. The reassessment comes at a time when rate cuts are anticipated, influencing currency valuations directly.
ECB and Fed Policy Divergence
The European Central Bank (ECB) is poised to lower interest rates, with predictions pointing to 70 basis points cut throughout the year, beginning as early as their next meeting on June 6. On the other hand, the Federal Reserve (Fed) in the United States appears to be on a different trajectory.
Market analysts do not foresee any changes from the Fed until September. Furthermore, even in September, the probability of a rate cut remains uncertain, currently estimated at 69% following a significant rise in initial jobless claims to an eight-month high.
Bank of England’s Cautious Stance
Across the pond, the Bank of England has maintained its interest rates in May, aligning with market expectations. However, it has also signaled the possibility of a rate cut later in the summer. This tentative approach suggests that the Bank is closely monitoring economic indicators before making any decisive moves, contributing further to the complex landscape that forex traders and investors must navigate.
By understanding these dynamics, investors can better position themselves in the forex market, anticipating currency movements based on central bank actions and economic indicators.
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