"EUR/USD is hovering around 1.1620, rebounding slightly from recent lows as expectations for a Eurozone recovery improve, while the U.S. dollar has paused after a strong rally. However, the euro's recovery remains limited due to the wide U.S.-EU interest rate gap and the likelihood that the Federal Reserve will maintain a cautious policy stance, while the ECB leans toward keeping rates steady."
"According to Reuters, the yield on the U.S. 10-year Treasury note currently stands near 4.35%, while the equivalent German Bund yield is around 2.55%. This gap of more than 180 basis points continues to weigh on the euro, underscoring that monetary policy differentials remain the key driver of the pair's direction. In Europe, economic activity is showing encouraging signs after a prolonged period of stagnation. The S&P Global Composite PMI for October came in at 52.2, up from 51.2 in the previous month - the highest level in 17 months."
"Inflation in the Eurozone stood at 2.2% in September (flash estimate by Eurostat) - still above the ECB's 2% target. The ECB is expected to keep rates unchanged at least until 2027, implying a neutral stance. The central bank eased earlier than the Fed and is now in a pause phase, rather than moving into an aggressive easing cycle involving rapid rate cuts or renewed quantitative easing."
EUR/USD is trading around 1.1620, rebounding slightly from recent lows while the U.S. dollar pauses after a strong rally. The euro's recovery remains constrained by a wide U.S.-EU interest rate gap and expectations that the Federal Reserve will keep a cautious policy stance while the ECB leans toward rate steadiness. The U.S. 10-year Treasury yield stands near 4.35% versus the German Bund around 2.55%, a gap exceeding 180 basis points. Eurozone activity shows improvement, with the S&P Global Composite PMI at 52.2, led by Germany while France lags. Eurozone inflation is 2.2%, above target, and the ECB is expected to hold rates steady; the U.S. economy remains resilient but consumer sentiment stays cautious.
Read at London Business News | Londonlovesbusiness.com
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