Euro down to begin the week

The Euro (EUR) fades the auspicious start of the week against the US Dollar (USD), prompting EUR/USD to return to negative territory and trade close to the 1.0700 neighbourhood after climbing to as high as the 1.0770 region earlier on Tuesday.

In the meantime, the Greenback reclaims some buying interest following Monday’s strong retracement and encourages the USD Index (DXY) to shift its attention to the key hurdle at 105.00 the figure so far.

In terms of monetary policy, the anticipation of a potential interest rate hike by the Federal Reserve (Fed) in November seems to have waned recently, while market participants persist in factoring in the likelihood of rate cuts taking place at some stage in the second quarter of 2024.

Turning our attention to the European Central Bank (ECB), market discussions seem to lean towards a pause at the September 14 meeting and a quarter-point rate raise by year’s end, given the current state of a somewhat divided Council.

Back to the euro calendar, the Economic Sentiment gauged by the ZEW Institute improved to -11.4 in September in Germany and worsened to -8.9 when it comes to the broader euro area. In the US, the NFIB Business Optimism Index receded to 91.3 during last month, while the usual weekly report on US crude oil supplies by the API is due later in the NA session.