The US Dollar (USD) traded on the defensive, lending some much-needed oxygen to the risk-associated space and prompting EUR/USD to change course after bottoming out in the sub-1.0800 zone early on Thursday.
EUR/USD regained traction and bounced off the sub-1.0800 region. The US Dollar lost momentum along with US yields. Investors’ attention now shifts to the US PCE. The US Dollar traded on the defensive, lending some much-needed oxygen to the risk-associated space and prompting EUR/USD to change course after bottoming out in the sub-1.0800 zone early on Thursday.
Looking ahead, the relatively subdued economic fundamentals in the Eurozone, coupled with the resilience of the US economy, reinforce the ongoing narrative of Fed-ECB policy divergence and suggest a stronger Dollar in the long run. Given the rising likelihood of the ECB reducing rates before the Fed, the potential for further weakness in EUR/USD should be considered in the medium term.
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