The euro fell in European trading on Wednesday against a basket of global currencies, giving up a one-week high against the US dollar and heading for its first loss in six days, amid a recovery in the US currency ahead of the Federal Reserve's monetary policy decisions.
Renewed inflationary pressures in the Eurozone have diminished the likelihood of the European Central Bank cutting interest rates at its meeting scheduled to begin later today, and details of that meeting are expected to provide more strong clues about the path of European interest rates for the remainder of this year and next year.
Price overview
Euro exchange rate today: The euro fell against the dollar by 0.2% to $1.1627, from today's opening price of $1.1651, and recorded a high of $1.1661.
The euro ended Tuesday's trading session up about 0.1% against the dollar, its fifth consecutive daily gain, and hit a one-week high of $1.1669, amid improved risk appetite in the markets.
US dollar
The dollar index rose more than 0.2% on Wednesday, beginning to recover from its lowest level in a week and heading for its first gain in the last three sessions, reflecting a rebound in the US currency against a basket of major and minor currencies.
This recovery comes ahead of the Federal Reserve's monetary policy decisions later today, which are expected to include an interest rate cut of about 25 basis points, in the second consecutive US interest rate cut.
The US Federal Reserve may adopt a more hawkish tone, given the renewed rise in inflationary pressures in the country, which could reduce the likelihood of another US interest rate cut before the end of this year.
European Central Bank
The European Central Bank meeting to study monetary policy in light of recent economic developments in the Eurozone will begin later today, with decisions to be issued tomorrow, Thursday.
The bank is widely expected to keep European interest rates unchanged at the 2.15% mark, the lowest level since October 2022, for the third consecutive meeting.
Markets are awaiting further clues on when the European Central Bank will resume its monetary policy easing cycle and cut interest rates before the end of this year.
Here at FX News Today, we expect that if the US Federal Reserve’s comments come in more hawkish than the markets anticipate, the chances of another US interest rate cut before the end of the year will decrease, which will support the continued gains of the US dollar against a basket of global currencies, most notably the euro and the British pound.
