Ella 
EUR/USD extended its gains at the start of the week, trading at higher levels around 1.0670 during Monday’s Asian session. The pair found upside support, possibly as a result of unfavorable U.S. consumer confidence data released on Friday.
The preliminary value of the Michigan consumer confidence index in the United States was 67.7, down from the previous value of 69.5. The reading was also below September’s forecast of 69.1.
The U.S. Dollar Index (DXY), which measures the greenback’s performance against six other major currencies, ended its ninth week with a gain of 0.26%. However, spot prices are trading lower around 105.30. Additionally, U.S. Treasury yields gave up entirely their intraday gains, which also weighed on the dollar. At press time, the U.S. 10-year Treasury yield fell to 4.32%.
Over the past week, major U.S. economic data continued to show strong economic conditions. These strong economic indicators increase the likelihood that the U.S. Federal Reserve will raise interest rates again before the end of 2023.
The Consumer Price Index (CPI), one of the indicators that tracks inflation, beat expectations. Additionally, retail sales for the same month and jobless claims for the second week of September both posted positive results, pointing to a positive outlook for the U.S. economy.
Market participants will be closely watching the Federal Reserve’s interest rate decision, scheduled for release on Wednesday. The Fed is expected to keep interest rates unchanged. In addition, market participants will also be watching the central bank’s communications for any hints or insights into the potential future direction of interest rates.
On the other hand, European Central Bank (ECB) President Christine Lagarde said on Friday that policymakers are not considering the possibility of further interest rate cuts. Lagarde also said that the European Central Bank intends to keep interest rates at a high level for a long time and is prepared to raise interest rates if necessary.
The statement reflects the ECB’s position to maintain prudent and accommodative monetary policy while remaining open to adjustments if economic conditions require it.
There are some events to watch in the Eurozone in the coming week: the Eurozone Harmonized Index of Consumer Prices (HICP) for August is due out on Tuesday. On Friday, the preliminary HCOB Composite Purchasing Managers’ Index for September is expected to be released. Traders will be watching the release of these data closely for trading opportunities in the EUR/USD pair.
