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- EUR/USD extends the decline to around 1.1730 in Monday’s early European session.
- The Fed cut interest rates last week but signaled gradual easing in the future, supporting the US Dollar.
- ECB’s de Guindos said central bank might not have completed a series of rate cuts.
The EUR/USD pair trades in negative territory for the fourth consecutive day around 1.1730 during the early European session on Monday. The major pair edges lower amid the rebound in the US Dollar (USD) after the Federal Reserve (Fed) resumed its easing cycle last week. The Eurozone Consumer Confidence report and Fedspeak will be the highlights later on Monday.
The Fed delivered an expected rate cut last week but indicated no rush to lower borrowing costs quickly in the coming months. Fed Chair Jerome Powell stated during the press conference that the decision was a “risk management cut” intended to address a weakening labor market while inflation remains somewhat elevated. Powell’s remarks suggested a less dovish stance than some investors anticipated. This, in turn, provides some support to the Greenback and acts as a headwind for the major pair.
Fed officials, including Chair Jerome Powell, are scheduled to speak later this week. Traders will closely monitor their views on the economy and the central bank’s independence. Renewed concerns over the Fed’s independence might cap the upside for the USD in the near term.
Across the pond, the ECB decided to keep the three key ECB interest rates unchanged at its September meeting. The ECB will maintain its data-dependent, meeting-by-meeting approach to monetary policy. Meanwhile, ECB Vice President Luis de Guindos said Thursday that the central bank might not have completed a series of rate cuts that began in June 2024. Nonetheless, ECB Governing Council member Martins Kazaks noted that the central bank can tolerate inflation just below 2% and should take time to weigh carefully whether more action is needed.
