News Maker 23

The euro strengthened against the US dollar on Tuesday (November 10), holding just below US$1.1230 and continuing a rebound from the 1.1137 level seen in the previous session. The euro’s gains were supported by "risk-on" sentiment, following diplomatic developments in the Middle East that raised hopes for an end to the conflict and pushed oil prices to a two-month low.

The decline in oil prices serves as a positive catalyst for the Eurozone, a region that relies on energy imports. Brent crude prices have fallen by more than 20% over the past week, potentially easing energy cost pressures and inflation within the region. Market sentiment also improved after US President Donald Trump stated that he would not launch an attack on Iran while negotiations are underway.

However, the euro’s upward momentum has begun to stall as investors brace for the release of the US Consumer Price Index (CPI) for October. Headline inflation is expected to rise to 3.9% year-on-year—up from 3.7%—while core inflation is projected to climb to 2.8% from 2.6%. These figures will be a primary focus, as they could influence market expectations regarding Federal Reserve policy.

Expectations for US monetary policy are further reinforced by recent economic data. The October labor market report showed robust job growth, while the US economy expanded by 3.4% year-on-year in the third quarter. This combination of solid growth, a strong labor market, and persistent inflation provides the Federal Reserve with room to maintain a hawkish stance.

Newsmaker Analysis: The euro has found support from falling oil prices and improved risk sentiment, but its next direction will depend heavily on the US CPI data. If inflation comes in higher than expected, anticipation of a tighter Federal Reserve policy could intensify, bolstering the US dollar. Conversely, a lower-than-expected CPI reading could potentially extend the euro’s rebound. (srh)

Source: Newsmaker.id