Solid Gold Berjangka – The Euro strengthened slightly against the US Dollar in Tuesday’s trading (Nov 10), holding near 1.1230 following a sharp rebound from the 1.1137 level on Monday. Investors opted to hold their positions ahead of the release of US Consumer Price Index (CPI) data, which is expected to be a major market driver.
The Euro found support from an improvement in risk sentiment, following progress in diplomatic efforts to de-escalate the conflict in the Middle East. Oil prices fell to a two-month low, providing relief to the Eurozone economy, which is heavily dependent on energy imports.
US President Donald Trump also affirmed that no attacks would be launched against Iran while negotiations are underway. This sentiment contributed to a decline of more than 20% in Brent crude prices over the week, helping to ease energy cost pressures across Europe.
Market focus is now centered on the US CPI data; headline inflation for October is expected to rise to 3.9% year-on-year, while core CPI is projected to increase to 2.8% from 2.6%. These figures will serve as a key indicator for the future direction of Federal Reserve policy.
Previously, robust US labor market data and third-quarter economic growth of 3.4% reinforced expectations that the Federal Reserve will maintain a hawkish policy stance. This remains a limiting factor for the Euro, as interest rate differentials continue to provide support for the US Dollar. (srh)