On Tuesday, the US Dollar (USD) continued its post-NFP strong recovery, motivating EUR/USD to extend its downward momentum to fresh six-week lows near 1.0720.
EUR/USD dropped to new multi-week lows around 1.0720. The US Dollar gathered extra pace despite declining US yields. US CPI and the FOMC event are due on Wednesday. On Tuesday, the US Dollar continued its post-NFP strong recovery, motivating EUR/USD to extend its downward momentum to fresh six-week lows near 1.0720.
The CME Group's FedWatch Tool now indicates nearly a 65% probability of lower interest rates by the November 7 meeting and around 51% in September. In the short term, the ECB's recent rate cut has widened the policy gap with the Fed, potentially exposing EUR/USD to further weakness. However, in the longer term, the emerging economic recovery in the Eurozone, combined with perceived slowdowns in the US economy, should help mitigate this disparity, offering some support to the pair.
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