Daily Analysis: USD Weakness Continues, Fed Speak In Focus

Our daily analysis of EUR, GBP and USD.

USD

• The dollar trades at multi-month lows versus its G3 counterparts with markets convinced the Fed hiking cycle is over.
• Predictions are moving forward for the first rate cut in the US, with CME FedWatch seeing around a 45% of a reduction by May.
• Various Fed member speak today, before US GDP figures on Wednesday and Core PCE data on Thursday.
• Further signs that the US economy is weakening while inflation continues to head south would likely pile more pressure onto the dollar.

EUR

• EUR/USD holds steady in the 1.09 handle, with a weaker dollar driving the pairs movement.
• ECB President Lagarde remained hawkish yesterday, hinting that the shrinking of their balance sheet may happen faster than expected.
• Inflation data from various European nations as well as the bloc itself will be the focus for EUR traders this week.

GBP

• The pound enjoys some time above 1.26 versus the dollar and heads back above 1.15 versus the euro.
• BoE Governor Bailey yesterday commented that returning inflation to their 2% will be ‘hard work’.
• Bailey seemed keen to dispel any talk of rate cuts in the UK, with analysts predicting some policy easing late next year.

Daily Rates

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