Anna 
The euro (EUR) experienced a decline against the U.S. dollar (USD) on Tuesday, pushing the EUR/USD pair below the 1.0700 level.
The U.S. dollar saw a resurgence, driven by waning risk appetite, particularly in response to disappointing trade figures from China. As a result, the U.S. Dollar Index (DXY) made gains and approached the 105.50 mark. The euro’s decline was accompanied by a sudden drop in both U.S. and German bond yields.
Regarding monetary policy, the consensus in the market suggests that the Federal Reserve (Fed) is likely to keep its policy unchanged. The possibility of a rate hike in December appears to be losing momentum, especially after the recent Federal Open Market Committee (FOMC) meeting and the disappointing nonfarm payrolls data for October released on Friday.
In the case of the European Central Bank (ECB), investors are leaning towards the likelihood of an extension in the pause of its interest rate hike cycle, possibly into the latter part of this year.
From an economic perspective, German industrial production contracted by 1.4% on a monthly basis in September, with a more significant 3.7% drop compared to the same period in 2022. Furthermore, the German construction Purchasing Managers’ Index (PMI) fell to 38.3 in October. In the eurozone, the construction PMI recorded 42.7 last month, while producer prices are set to be released at 10:00 GMT.
Across the Atlantic, September’s trade balance results will be published at 13:30 GMT, along with the IBD/TIPP Economic Optimism Index and changes in consumer credit.
Market participants will also closely monitor speeches by various Federal Reserve officials, including FOMC President Michael Barr (permanent voter, centrist), FOMC President Christopher Waller (permanent voter, hawk), New York Fed President John Williams (permanent voter, centrist), Dallas Fed President Lorie Logan (voter, hawkish), Minneapolis Fed President Neel Kashkari (voter, centrist), and Chicago Fed President Austan Goolsbee (voter, centrist).
