In European trade, the euro appreciated vs the US dollar, holding onto gains for the second day and moving in a positive territory ahead of further indications regarding the direction of European policy going forward.
In order to reevaluate the likelihood of future interest rate decreases by the ECB, traders are currently awaiting statements made later today by a number of ECB officials.
EUR/USD
After climbing 0.1% on Monday, the EUR/USD saw a 0.15% increase to 1.0966, with a session low at 1.0946. This was the second profit in three days, and it was still above a three-week low at $1,0877.
The euro fell 0.9% versus the US dollar last week, marking the first weekly decline in a month as worries about the growing difference in interest rates between the US and Europe intensified.
Following the upbeat December ECB policy meeting, traders reduced their projected 160 basis point reduction in interest rates in 2024 to 150 basis points.
Traders are currently awaiting Fed speeches and additional data to ascertain the likely direction of policies going forward.
Approximations
The Forex analysts at ENG Bank think it will be difficult to sustain EUR/USD advances over 1.10 because the market is now driven by risk appetite and stock performance.
They think that in order for the EUR/USD to stay strong, European stocks must continue their current upward trajectory.
