The EUR/USD pair remains subdued near its one-month low of 1.1600 on Thursday, trading around 1.1615 at the time of writing. Attempts to recover continue to meet selling pressure, with ongoing political uncertainty in France weighing on sentiment. Market attention now turns to Federal Reserve (Fed) Chair Jerome Powell’s upcoming speech at a banking event in Washington, which could offer fresh cues on the central bank’s policy outlook.
Earlier, New York Fed President John Williams signaled support for additional monetary easing in the months ahead. In an interview with The New York Times, Williams noted that underlying inflation is gradually declining and that the slowdown in employment deserves close monitoring. His remarks reinforced market expectations of two more Fed rate cuts this year.
ECB Accounts Highlight Mixed Inflation Views, Limited Policy Urgency
In Europe, the European Central Bank’s (ECB) Monetary Policy Meeting Accounts reflected a cautious tone, citing growing uncertainty in the global economic landscape. Policymakers largely agreed that there is no immediate pressure to adjust policy, though opinions diverged on inflation risks. Some members warned of potential upside risks, while others argued that price pressures are easing. The report had only a limited impact on the Euro.
Daily Market Digest: Euro Gets Brief Respite, But Weak Trend Persists
A mildly improved risk sentiment offered temporary relief to the Euro on Thursday, though its broader downtrend remains intact. In France, President Emmanuel Macron is expected to name a new Prime Minister within the next 48 hours following the resignation of Sébastien Lecornu. The outgoing PM sought to calm markets, dismissing opposition calls for early elections by noting the lack of a parliamentary majority for such a move.
Meanwhile, fresh data from Germany painted a mixed picture. The German Trade Balance showed a larger-than-expected surplus of €17.2 billion in August, up from €14.2 billion in July. However, the increase was driven mainly by a 1.3% drop in imports, offsetting a 0.5% decline in exports, which fell for the second consecutive month. These figures followed Wednesday’s report showing a 4.3% contraction in Industrial Production for August—further evidence of softening momentum in Europe’s largest economy.
Fed Minutes Highlight Division, US Government Shutdown Drags On
Across the Atlantic, the US government shutdown has entered its eighth day with no significant progress toward a resolution. The Federal Reserve’s September meeting minutes, released on Wednesday, underscored a growing split among policymakers over the extent of rate cuts needed to sustain growth without reigniting inflation. The Fed’s dot plot, published in the September 17 Summary of Economic Projections, indicated a 10–9 vote favoring at least two more rate cuts before year-end.
Geopolitical Update: Israel–Hamas Ceasefire Lifts Market Sentiment
On the geopolitical front, Israel and Hamas have reached a tentative ceasefire agreement aimed at facilitating the release of hostages and the gradual reconstruction of Gaza. While the truce remains fragile, it has helped improve global market sentiment, contributing modestly to the Euro’s stabilization.
