EUR/USD is trading in the 1.1030s on Thursday, showing a slight decline as geopolitical tensions boost demand for the safe-haven US Dollar (USD), while the Euro (EUR) faces pressure from a bleak economic outlook for Europe.
The pair has opened lower after experiencing three consecutive days of declines, with the Euro now worth nearly two cents less than at the beginning of the week. This weakening follows lower-than-expected inflation figures for September, which bring the Eurozone's headline inflation rate to 1.8%—the first drop below the European Central Bank's (ECB) 2.0% target in 39 months. This development raises the likelihood of more aggressive interest rate cuts by the ECB, which could deter foreign capital inflows and negatively impact the Euro.
In contrast, market expectations are diminishing regarding the US Federal Reserve's potential for another significant 50 basis points cut in November, which is bolstering the US Dollar. Strong US jobs data, including a rise in JOLTS Job Openings to 8.04 million in August and an ADP Employment Change of 142K in September, is reassuring investors about the resilience of the US economy. With the Nonfarm Payrolls (NFP) report set to be released on Friday, market participants are closely monitoring these developments. Additionally, escalating geopolitical tensions in the Middle East are further strengthening the US Dollar, adding downward pressure on the EUR/USD pair.
