The European currency faces ongoing selling pressure, causing the EUR/USD pair to recede and trade close to the crucial barrier at 1.0800 on Thursday.

EUR/USD Weakens as US Dollar Gains and Risk Aversion Prevails
EUR/USD continues to lose ground for the third consecutive session on Thursday, as the greenback strengthens, pushing the key support level of 1.0800 to a test amidst the significant rise in the US dollar.

As seen in previous sessions, the prevailing risk-off sentiment remains supported by lingering concerns regarding the US debt ceiling issue. This, in turn, contributes to the renewed upward bias in the US dollar.

Additionally, the European Central Bank’s (ECB) rate setters’ stance is weighing on the euro, as Vice-President L. De Guindos suggests that the bank has mostly completed its tightening measures, despite hinting at potential rate hikes in the future. Conversely, A. Müller, known for a more hawkish stance, dismisses the possibility of rate cuts in early 2024.

On the economic front, the only event of significance from the European side is President C. Lagarde’s upcoming speech. In the North American session, market participants will be monitoring Initial Jobless Claims, the Philly Fed Manufacturing index, Existing Home Sales, and the CB Leading Index. Additionally, FOMC members P. Jefferson, L. Logan, and M. Barr are scheduled to deliver speeches.

EUR/USD continues its decline for the week, gradually approaching the important 1.0800 level as the trading week nears its end.

The euro’s performance is expected to closely mirror the movement of the US dollar and could be influenced by any divergences in the interest rate adjustment plans between the Federal Reserve and the ECB.

Looking ahead, the likelihood of further rate hikes remains favorable due to hawkish statements from the ECB. However, this perspective contrasts with some signs of economic momentum loss in the region.


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