Euro at highest level in nearly 3 months

The Euro (EUR) gathers extra upside impulse against the US Dollar (USD), encouraging EUR/USD to advance to nearly three-month tops around 1.0830 on Tuesday.

On the other hand, the Greenback sinks well below the 105.00 support when measured by the USD Index (DXY), or eight-week lows, amidst the continuation of the decline from last week’s top around 106.00 and rising speculation of rate cuts by the Fed as soon as in the Summer of 2024.

The pronounced knee-jerk in the Dollar comes amidst further weakness in US yields across different time frames, and it is particularly exacerbated after US inflation figures dropped more than expected in October. Indeed, tracked by the CPI, US consumer prices rose at an annualized 4.0% and 3.2% YoY when it comes to the Core reading (excluding food and energy costs).

Around the European Central Bank (ECB), recent views from Council members keep pointing to a prolonged pause of the current restrictive stance as inflation continues to run hot and well above the target.

Further strength for the single currency also came after Economic Sentiment in both Germany and the broader Eurozone improved to 9.8 and 13.8, respectively, for the current month. Still around the euro bloc, another revision saw the GDP Growth Rate contract 0.1% QoQ in Q3 and expand 0.1% over the last twelve months.