EUR/USD continues to trade within a narrow range below the 1.1000 level as traders await the release of Euro area business Purchasing Managers’ Index (PMI) data for fresh market direction .
The upcoming PMI figures will provide insights into the performance of the Eurozone economy and could potentially impact the exchange rate.
EURUSD Daily Chart
Divergent ECB-Fed Policy Outlooks
The divergence in monetary policy outlooks between the European Central Bank (ECB) and the Federal Reserve is adding support to the Euro. While the ECB maintains its accommodative stance, the Federal Reserve has signaled a more hawkish tone, which has put pressure on the US Dollar. Traders are closely monitoring any new developments that may influence the currency pair.
Consolidation ahead of US PMI Data
The US Dollar is currently consolidating losses as traders await the release of US PMI data. Positive PMI figures could strengthen the case for a potential interest rate hike by the Federal Reserve, which may boost the US Dollar against the Euro. This data will be closely watched and could impact the short-term direction of the EUR/USD exchange rate.
GBP/USD Eases to Near 1.2750 Ahead of UK, US PMI Data
GBP/USD is seeing a slight pullback, trading relatively flat near the 1.2750 level as the European session begins on Friday. The currency pair has held onto its weekly gains, benefiting from a more hawkish outlook from the Bank of England (BoE) and a dovish pivot from the Federal Reserve. Traders now turn their attention to the release of preliminary UK and US Purchasing Managers’ Index (PMI) data for further market direction.
GBPUSD Daily Chart
Hawkish BoE Outlook Supports Sterling
The British pound (GBP) has been supported by the hawkish stance of the Bank of England. As the central bank has indicated potential interest rate hikes in the future, it has boosted investor confidence in the pound. This outlook continues to underpin the strength of GBP/USD, despite the recent pullback.
Dovish Fed Pivot Weighs on the Dollar
On the other hand, the US dollar (USD) has been affected by the Federal Reserve’s shift towards a more dovish stance. The central bank has signaled a willingness to maintain accommodative monetary policies, which has put pressure on the dollar. This dovish pivot has contributed to the relative strength of GBP/USD.
Focus on Preliminary UK and US PMIs
As traders await the release of preliminary PMI data from both the UK and the US, market focus will be on the performance of the manufacturing and services sectors. The PMI figures provide insights into economic activity and can influence currency movements. Any surprises or deviations from expectations in the PMI data could impact the short-term direction of GBP/USD.
Bitcoin Surges Amidst Federal Reserve Signal
Bitcoin (BTCUSD) and other cryptocurrencies experienced significant gains on Thursday after Federal Reserve officials hinted at potential interest-rate cuts in the coming year. The price of Bitcoin rose by 4.1% in the past 24 hours, reaching $42,869, although it remains below its recent peak of $44,000.
BTCUSD Daily Chart
Positive Market Response to Fed’s Dovish Pause
Federal Reserve Chairman Jerome Powell adopted a dovish tone in his remarks following the central bank’s decision to keep interest rates unchanged on Wednesday. Additionally, forecasts from Fed officials revealed a median consensus of three quarter-point rate cuts expected in the next year.
According to industry experts, “High real interest rates have weighed on Bitcoin’s valuation, so we expect rate cuts to help support crypto markets. A soft landing for the U.S. economy, Fed rate cuts, and a potentially contentious presidential election should all be macro tailwinds for Bitcoin in 2024.”
Caution Remains Amidst Rally
While Bitcoin and other cryptocurrencies were bolstered by a broader rally in risk-sensitive assets, some analysts remain cautious about endorsing a sustained upward trend. Bitcoin has surged by over 50% in less than two months, fueled by optimism that U.S. regulators will soon approve the first exchange-traded funds linked to spot Bitcoin trading.
However, experts believe that despite expectations of declining interest rates, the market has already priced in much of the positive news. This suggests that prices could enter a consolidation phase before attention shifts back to the imminent launch of ETFs.
Beyond Bitcoin: Ether and Altcoins Join the Rally
In addition to Bitcoin’s rise, Ether (ETHUSD), the second-largest cryptocurrency, increased by 4.9% to reach $2,284. Smaller tokens, known as altcoins, also experienced gains. Cardano (ADAUSD) rose by 13%, while Polygon (MATICUSD) gained 4.5%. Memecoins, including Dogecoin (DOGEUSD), also saw a rise of 4.5%.
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