Ella 
In early trading in Asia on Friday, the euro/dollar rose slightly to its highest level in four months. A weaker dollar and a hawkish stance from the European Central Bank boosted EUR/USD. Investors are awaiting the U.S. core personal consumption expenditures price index for November to be released on Friday. The core PCE price index is expected to rise 0.2%, or an annual rate of 3.3%. EUR/USD is currently trading around 1.1008, with an intraday increase of 0.05%.
On Thursday, European Central Bank (ECB) Vice President Luis de Guindos said it was too early to start easing monetary policy. He further said that the central bank does not expect a technical recession in the euro zone economy and they welcome the EU’s agreement on fiscal reform as it will ease market uncertainty. Meanwhile, ECB Governing Council member Martins Kazak said late on Wednesday that the central bank would need to keep interest rates at current levels for some time, but the first rate cut could come later than mid-2024, as investors expect.
In the United States, the Federal Reserve’s policy stance is more dovish, and it is expected that the Federal Reserve may cut interest rates by 75 basis points (bps) in the second half of 2024. In terms of data, the U.S. Bureau of Economic Analysis (BEA) announced on Thursday that U.S. gross domestic product (GDP) grew by 4.9% in the third quarter, which was lower than the expected 5.2%. In other words, sluggish U.S. economic data and expectations of three interest rate cuts by the Federal Reserve have suppressed the U.S. dollar and become a “tailwind” for the EUR/USD currency pair.
Next, Germany will release its import price index, and France and Italy will release their consumer confidence index. Market participants will be closely watching the U.S. core PCE price index due out on Friday. The incident could spark market volatility ahead of the holidays. Traders will take cues from this data and look for EUR/USD trading opportunities from it.
