Euro Takes a Little Bit of a Step Back
The euro slipped a sliver – just 0.03% – by 12:40 p.m. GMT, hovering around 1.07240 against the U.S. dollar. It’s a subtle drift, but it tells us a lot about the feel of the markets.
Why the Euro Is Feeling the Yo‑Yo Effect
Meanwhile, the U.S. is still dealing with a stubborn inflation dance. The Fed’s favorite gauge, the core PCE price index, nudged up by 0.3% month‑on‑month and stayed steady at 2.8% year‑on‑year—higher than the 2.6% many had hoped for.
Because of this, the rumor mill firmly places the next rate cut outside the first half of the year. Think of it as the Fed firming up its shoes, hoping that if even a 25‑basis‑point tweak can sneak past, it’ll come in September at the earliest.
Markets Are Here to Play It Safe
- Only a 9% chance that the Fed will cut rates next month, according to the CME FedWatch Tool.
- Even in July, hopes are dimmest. Expect those smile‑wide rate adjustments to stay on the sidelines until late summer.
- EuroZone’s data this week has given the single currency a tiny bounce, but it hasn’t yet broken the grip of high interest rates and bond yields.
Geopolitics—The Calm Before the Storm
The Middle East seems, for now, calm. But that serenity is shaky. If hostilities flare again, the dollar’s “safe haven” status could come to the fore, giving it a boost. And the possibility of a ground assault in Rafah might plunge the region into even more chaos.
TL;DR
Euro – tiny dip versus the dollar
Fed – still waiting for any rate cuts, probably not until September
Inflation – core PCE stays stubbornly high
Geopolitics – a calm front that might break, favoring the dollar
Keep your eyes on the markets—you never know when the next surprise will swing the dance again.
