No major events are expected today.

The EUR/USD pair remains stable after a rise in the previous session, hovering around the 1.0860 level during the Asian trading hours on Monday. A potential decline has emerged as speculation about the Federal Reserve (Fed) cutting interest rates by 50 basis points in November was dispelled by recent data indicating the resilience of the U.S. economy.

According to the CME FedWatch Tool, the probability of a 25-basis point rate cut in November has increased to 99.3%, up from 89.5% a week earlier. U.S. retail sales in September rose by 0.4% on a monthly basis, surpassing the 0.1% growth recorded in August and the market’s expectation of a 0.3% increase. Additionally, initial jobless claims in the U.S. fell by 19,000 for the week ending October 11, marking the most significant decline in the last three months. The total number of claims dropped to 241,000, well below the anticipated 260,000.

Research from Rabobank indicates that the market interprets recent comments from European Central Bank (ECB) officials as a sign that they are increasingly comfortable with the inflation outlook in the Eurozone. As a result, the ECB appears to have shifted its focus to supporting regional growth. This has fueled speculation about a possible acceleration in the ECB’s easing measures, including the possibility of a larger rate cut of 50 basis points. Such a move could impact the euro and put downward pressure on the EUR/USD pair.

The euro faced downward pressure following the European Central Bank’s (ECB) decision to cut interest rates by 25 basis points last week. This decision was made in response to the significant drop in inflation, which peaked at 10.6% in October 2022 but fell to 1.7% in September, below the ECB’s 2% target.

Recommendations: Trade primarily with Buy orders from the current price level.