Euro Slides to a New Low – What’s Going On?
By 1:45 p.m. GMT the euro slipped 0.18 % against the dollar, trading at 1.07967 – the weakest spot it’s hit in a whole week. The drop came after a rough session of swing trading that left the currency deflated.
Why the USD Took a Little Victory
- US Growth Slows – The 4th‑quarter GDP only ticked up 3.2 % (vs. 4.9 % last quarter) and fell short of the 3.3 % forecast.
- Trade Deficit Grows – January’s goods deficit hit $90 B, a hammer‑in over the $88 B expectation.
- Both metrics gave a “good news” glow that temporarily steadied the euro, even though the overall day’s trend was negative.
The Fed’s Eye on Inflation
A chilling twist: the Core Personal Consumption Expenditure (PCE) index for January is slated to drop to 2.4 % from 2.6 %. That might fire up the euro’s squeeze. Why? Because the US inflation gauge comes alive when consumer spending— the main inflation engine— jumps to a 3 % headline.
Result: the fed’s chance of cutting rates next May only nudges up to roughly 17 % (down from 16 % yesterday). Market speculation says fine‑tuning ahead of the next policy meeting is in play.
Eurozone’s Quiet Storm
Meanwhile, EU economic figures stay lukewarm. Confidence dipped amid a swirl of uncertain politics and shaky industry performance. That mix of lackluster growth and low confidence keeps the euro close to its year‑low mark.
What You Should Watch
- Core PCE numbers – will they climb higher than 2.4 %?
- European GDP – is the slowdown reversing?
- Fed’s next rate move – any signal of a narrowing spread?
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