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Source: Newsmaker.id
The EUR/USD pair weakened for the second consecutive day, trading around 1.1155 on Wednesday (November 11). The Euro failed to sustain its earlier gains as the US Dollar received a boost from US inflation data that came in higher than expected, alongside hawkish remarks from several Federal Reserve officials.
In Europe, final inflation data for Germany confirmed that the Harmonised Index of Consumer Prices (HICP) fell by 0.1% month-on-month in October, while showing a 2.8% year-on-year increase. These figures represent a slowdown compared to September—when the HICP rose by 0.6% month-on-month and 3.3% year-on-year—and thus failed to provide any significant momentum for the Euro.
Conversely, US consumer inflation rose by 0.4% in October, exceeding market expectations of 0.3%. Core CPI also climbed by 0.3%, surpassing the 0.2% forecast. This data reinforces the view that price pressures in the US remain elevated, providing the Federal Reserve with room to maintain a restrictive policy stance.
Pressure on the Euro intensified following comments from Philadelphia Fed President Anna Paulson, who called for further gradual tightening, while Dallas Fed President Lorie Logan stated that the Fed requires at least two additional 25-basis-point interest rate hikes. These statements have further solidified market expectations for a hawkish policy approach.
Newsmaker Analysis: The market has now almost fully priced in a Federal Reserve rate hike for the December meeting, with an approximately 12% probability of a 50-basis-point increase. Should expectations for monetary tightening continue to strengthen, the US Dollar is likely to remain the primary driver of downward pressure on the EUR/USD pair; meanwhile, the Euro will require a new catalyst to reverse its current weakening trend. (srh)
Source: Newsmaker.id