Outlook for EUR/USD: Davos Insights and Fed Speeches

١٦ يناير

Outlook for EUR/USD: Davos Insights and Fed Speeches

Several ECB officials are expressing opposition to rate cuts, potentially helping to curb losses in the EUR/USD, which is currently testing the 61.8% Fibonacci level after a more than 0.7% drop.

Davos has prompted ECB officials to share their views on the Euro Area's prospects and their positions on the likelihood of interest rate cuts in 2024.

ECB Board Member Gediminas Šimkus, also Chairman of the Lithuanian Central Bank, suggests holding off on a central bank move, but sees the possibility of a cut in the summer. Similarly, ECB Board Member Madis Müller, the Governor of the Central Bank of Estonia, believes expectations for a rate cut are ahead of the current data reality.

However, the future direction of EUR/USD remains uncertain, as Fed officials are pushing back against interest rate hikes too, and their influence in the markets may be more significant.

Federal Reserve member Christopher Waller, whose November comments raised expectations of Fed rate cuts, today (not at Davos) expressed a more cautious outlook on the pace of rate cuts ("I see no reason to move as quickly or cut as rapidly as in the past").

Monitoring other Fed members' addresses this week will be crucial:

Wednesday, Jan 17
09:00: Fed's Bowman Speech
09:00: Fed's Barr Speech
15:00: Fed's Williams Speech

Thursday, Jan 18
07:30: Fed's Bostic Speech

Friday, Jan 19
16:15: Fed's Daly Speech