FX Daily: Trive Bearish on EUR/USD

0 comments

FX Daily: Trive Bearish on EUR/USD

With the October ECB meeting out of the way, the focus will move to the US election with the EUR simply “not the dollar”. The EUR will mostly mirror USD sentiment around the US election, but it could be especially vulnerable to a Republican presidency. In contrast, the USD remains supported as markets reduce expectations for a November rate cut, driven by persistent geopolitical risks and the approaching US election. 

 

EUR: Now is the data game

Disappointing economic data from the Eurozone, along with increasingly dovish ECB statements, have heightened market expectations of further easing. Currently, European rate markets are pricing in approximately 150bps of additional cuts from the ECB by the end of 2025, with a 72% probability of a 50bps cut as soon as December.

The dovish ECB outlook contrasts sharply with the recent reduction in Fed rate cut expectations, fueled by positive US data surprises and rising market optimism around a potential Trump victory in the US election. Consequently, the EUR-USD short-term rate spread has narrowed throughout October, weighing on EUR/USD. In the week ahead, the focus will likely stay on relative price action in Eurozone and US fixed income markets. With some downside from the ECB-Fed rate divergence already factored into EUR/USD, the currency pair may either consolidate or face renewed pressure if rate differentials stabilize and data deteriorate further.

EUR investors will also closely watch the Q3 GDP and October HICP inflation data. Given the current dovish tone of ECB rate expectations, downside surprises in these data points could be necessary to drive any significant weakness in the EUR. Nevertheless, EUR/USD may remain a sell on rallies leading up to the critical US presidential election on November 5.

 

USD: ‘Trump Trade’

With the US election approaching, the improving odds of a Trump victory have reignited "Trump Trades" among fixed-income investors, contributing to a USD rally. This raises a central question for FX investors: how much further could USD strengthen on a Trump win, and how much could it weaken on a Harris win? Beyond election dynamics, the recent USD gains may also stem from a reassessment of the Fed’s dovish outlook amid positive US economic surprises. The S&P Global composite PMI’s unexpected acceleration highlights growth divergence, with a struggling eurozone supporting a USD-positive backdrop likely to persist. As mentioned in last week’s outlook, a Harris victory could trigger a significant USD selloff, similar to the drop following Joe Biden’s 2020 victory, despite USD's current rate advantage and resilient economic indicators.

Looking ahead to next week, USD investors will closely watch the latest Non-Farm Payrolls, ISM, and PCE data. While recent industrial action and the hurricane season in the US might add volatility to labor data, it may have limited impact on the Fed’s November decision. Overall, USD may continue to find buy-on-dip support as the US election approaches as well as still uncertainty in the Middle East tension.

EUR/USD 4H Chart

Disclaimer

This material is provided for informational purposes only and does not constitute financial, investment, or other advice. The opinions expressed in this material are those of the author and do not necessarily reflect the views of Trive International. No opinion contained in this material constitutes a recommendation by Trive International or its author regarding any particular investment, transaction, or investment strategy. This material should not be relied upon in making any investment decision.

 

The information provided does not consider the individual investment objectives, financial situation, or needs of any specific investor. Investors should seek independent financial advice tailored to their individual circumstances before making any investment decisions. Trive International shall not be liable for any loss, damage, or injury arising directly or indirectly from the use of this information or from any action or decision taken as a result of using this material.

 

Trive International may or may not have a financial interest in the companies or securities mentioned. The value of investments may fluctuate, and investors may not get back the amount they originally invested. Past performance is not indicative of future results.

 

For more information about Trive International, please visit http://trive.com/int

 

Additional Information 

Investing involves risk, including the potential loss of principal. Diversification and asset allocation strategies do not ensure a profit or guarantee against loss. The content in this material is subject to change without notice and may become outdated or inaccurate over time. Trive International does not undertake any obligation to update the information in this material.

By accessing this material, you acknowledge and agree to the terms of this disclaimer. If you do not agree with these terms, please refrain from using this information.

댓글

No comments

댓글 남기기
Your Email Address Will Not Be Published.

Trive

TriveHub

TriveHub_LogoWhitev3
TriveHub, 금융 역량 강화의 시작 

저희의 포괄적인 금융 교육 플랫폼인 TriveHub를 탐험해 보세요. 시장 인사이트, 전문가 가이드, 프리미엄 콘텐츠가 함께 모여 여러분의 투자 여정을 형성합니다. 주식, 통화, 가상화폐 등 어떤 것이 관심을 끌든지, 우리는 여러분이 정보에 기반한 결정을 내릴 수 있도록 필요한 지식을 제공합니다.
모든 금융 상품은 마진 거래 시 자본에 높은 위험을 수반합니다.모든 투자자에게 적합하지 않으며 초기 예치금보다 더 많은 손실을 입을 수 있습니다. 관련된 위험을 완전히 이해하고 필요한 경우 독립적인 조언을 구하시기 바랍니다. 자세한 내용은 전체 위험 공시, 영업 약관, 개인정보 보호정책을 참조하십시오. 
로그인 기능 지원 및 신뢰할 수 있는 미디어 파트너가 사이트 사용량을 분석할 수 있도록 쿠키를 사용합니다. 쿠키를 활성화한 상태로 사이트를 탐색하면 전체 사이트 경험을 즐길 수 있습니다. 쿠키 사용에 동의하게 되며, 자세한 내용은 쿠키 정보를 참조하십시오.
이 웹사이트(trivehub.com)는 Trive International의 소유이며, Trive International Ltd.의 등록 상표입니다. Trive International Ltd.는 영국령 버진 아일랜드 금융 당국인 금융 서비스 위원회(FSC BVI)의 인가 및 규제를 받으며, 회사 번호 1728826 및 라이선스 번호 BVI SIBA/L/14/1066으로 등록되어 있습니다.

© 2024 Trivehub

Trivehub is operated by Trive International. The information on this site is for informational purposes only and does not constitute investment advice.