Euro Weakens Against the US Dollar: All Eyes on US Inflation Data

Forex - ING pointed out that the euro has fallen to its lowest level against the dollar in a year, due to further deterioration in interest rate differentials. ING analyst Francesco Pesole stated that the markets have "doubled down" on expectations that the European Central Bank will cut rates more than the Fed. According to Pesole, this situation coincides with a period where proposed tariffs by the newly elected President of the United States, Donald Trump, are expected to harm the growth of the Eurozone. However, Pesole emphasized that the markets are still pricing in a low probability for the ECB to cut rates by another 50 basis points in December. He added that if the U.S. inflation data, to be released at 16:30 Turkish time, shows that core inflation has remained stable in October, the euro could widen its losses. UniCredit Research analysts also stated, "October U.S. CPI data is a key event for fixed income markets." Analysts expect the October headline inflation in the U.S. to remain unchanged at 0.2% month-on-month and core inflation to remain unchanged at 0.3% month-on-month.