Ella 
EUR/USD opened higher on Monday, recovering some of the losses it suffered after hitting a new one-week low on Friday, and is now trading just below the psychological 1.0500 level. For now, the EUR/USD appears to have snapped its two-day losing streak, but due to the lack of follow-through, caution is advised before entering positions for further appreciation.
During Monday’s Asian trading session, the U.S Dollar was unable to extend the gains it had made over the past two trading days on the back of a rise in the U.S Consumer Price Index (CPI), and instead remained range-bound, providing some support for the EUR/USD pair. However, the Dollar’s bearishness seems to be supported by expectations that the Federal Reserve (Fed) will keep interest rates higher for longer. The latest U.S. consumer inflation data, released last Thursday, once again confirmed this expectation. U.S. inflation remains above the Fed’s target, opening the door for the Fed to raise rates at least once in 2023.
Meanwhile, the economic outlook remains supportive of rising U.S. Treasury yields and continues to be a tailwind for the dollar. However, recent dovish comments from several Fed officials suggest that the central bank is preparing to keep rates on hold for a second consecutive month in November and move closer to ending its policy tightening cycle. This, along with bullish U.S. stock futures, further weakened the safe-haven dollar. However, speculation that the European Central Bank (ECB) may not raise interest rates further for the time being has paved the way for gains in the EUR/USD.
Indeed, the ECB said in September that the 10th rate hike in its 14-month battle against inflation was likely to be the last. Separately, European Central Bank policymakers expressed cautious optimism about the outlook for inflation last week, believing it would return to 2%.
