The EUR/USD market sentiment is cautious ahead of the Federal Reserve’s interest rate decision. The US Dollar’s value has risen, largely due to strong Employment Cost Index figures, and the Euro has struggled, despite positive Eurozone data.
EUR/USD demonstrates a dropping trend for the second consecutive day. European markets are mostly inactive due to Labour Day, as investors wait for the Federal Reserve’s next moves. The US Dollar’s position against six key global currencies continues to rise.
Significant growth was observed in the US Employment Cost Index for Q1, reaching 1.2%, the greatest increase seen in a year.
Dollar ascends, Euro flounders ahead of Fed verdict
This unexpected rise supports evidence of ongoing wage pressure and highlights US inflation concerns.
Moreover, the unexpected rise in the US Employment Cost Index also underscores the Federal Reserve’s looming decision on whether or not to tamper with interest rates. This situation displays cautious optimism, reflecting a recovering job market and the threat of inflation.
Investors will monitor the release of the ADP Employment Change and ISM Manufacturing PMI data from the US, to better understand the current state of the US economy, before the Federal Reserve’s Monetary Policy Statement.
Despite strong Eurozone data, the Euro didn’t manage to maintain its resulting gains. The Eurozone GDP surpassed the expected 0.3% for Q1. Many ECB policymakers continue to support the likelihood of interest rate cuts in June.
Currently, the EUR/USD trades just above 1.0650, influenced by weakened risk sentiment and a strengthened US Dollar. The European Central Bank’s (ECB) monetary policy decisions will also play a determining role in influencing the future direction of this currency pair.
