EUR/USD advanced on Wednesday as the Euro (EUR) regained momentum against the US Dollar (USD), with the pair trading near 1.1580 after rebounding from a brief dip to 1.1547 earlier in the session. Softer US Dollar sentiment prevailed despite a batch of US data releases that came in largely better than expected.
US data beats forecasts but reinforces fed rate-cut expectations
Delayed September figures showed Durable Goods Orders rising 0.5%, surpassing the 0.3% forecast after a solid 3% gain in August. Excluding transportation, orders increased 0.6%, also topping expectations and the previous month’s 0.5% reading. Meanwhile, non-defense orders rose just 0.1%, missing the 1.9% forecast and matching August’s result.
Initial Jobless Claims came in at 216K, better than the 225K expected, with the prior figure revised to 222K from 220K.
Despite the upbeat data, markets remained convinced that the Federal Reserve (Fed) will deliver a 25-basis-point rate cut at its December 9–10 meeting. According to the CME FedWatch Tool, traders assign nearly an 80% probability to a December cut, keeping the USD capped and offering support to EUR/USD.
Euro finds support as policy divergence widens
With the Fed leaning more dovish, the Euro is benefiting from growing policy divergence. The European Central Bank (ECB) is widely expected to keep rates unchanged at its next meeting as policymakers look for clearer evidence before shifting policy.
Wednesday’s light Eurozone calendar left the pair driven primarily by USD dynamics, although comments from ECB officials provided some support. Governing Council member Madis Müller said the ECB should avoid rushing into rate cuts based on a minor inflation undershoot and highlighted signs of economic recovery.
ECB Vice-President Luis de Guindos added that growth risks are now more balanced and noted positive developments in services and wage inflation, emphasizing that the current policy stance remains appropriate.
With the Fed outlook increasingly dovish and Eurozone officials projecting cautious stability, EUR/USD retains a mild upward bias heading into the final sessions of the week.
