The euro (EUR) gained 0.13% on Monday as weaker-than-expected sales of new homes in the U.S. brought the U.S. dollar lower.
Possible effects for traders
Technically, the U.S. Dollar Index did enough damage over the last two weeks to really suggest a breakdown. So the dollar’s heyday is done, and we’re now looking at a softer dollar,’ said Amo Sahota, the director at FX consulting firm Klarity FX. The market believes the Federal Reserve (Fed) has ended hiking interest rates and may start cutting them by Q1 2024. Also, expectations for the eurozone’s monetary policy don’t differ drastically. Christine Lagarde, the President of the European Central Bank (ECB), said it’s too early to claim success in the battle against inflation. However, she acknowledged the economy is stagnating, suggesting that the eurozone may have reached the peak in the interest rate. Eurozone inflation data and the U.S. core Personal Consumption Expenditure data will be released on Thursday. Both indicators are expected to show a trend of disinflation.
EURUSD was falling slightly during the early European trading session. The latest data showed that consumer confidence in Germany improved in November but remained at a rather low level. Later today, traders should pay attention to the U.S. Consumer Confidence Index at 3:00 p.m. UTC. Higher-than-expected figures will likely reverse the bullish trend in EURUSD.