No major events are expected today.

The EURUSD pair continued to decline to the 1.0920 level during the early Asian session on Monday. Risk aversion amid rising geopolitical tensions in the Middle East and conflicts between China and Taiwan is putting pressure on the sale of riskier currencies such as the euro (EUR).

On Monday, a U.S. State Department representative said they were “seriously concerned about the military drills of the People’s Liberation Army (PLA) in the Taiwan Strait and around Taiwan.” They also stated that they would monitor China’s actions and coordinate with allies and partners regarding shared concerns. Any signs of escalating tensions could drive demand for safe-haven currencies, benefiting the US dollar and weighing down on the EURUSD pair.

Traders are anticipating a 25 basis point (bp) rate cut by the Federal Reserve (Fed) in November following the release of the U.S. Producer Price Index (PPI) on Friday. The CME FedWatch tool showed the probability of a 25 bp rate cut at nearly 86.8%, compared to 83.3% before the PPI data was released.

Across the Atlantic, the euro is experiencing some pressure as it is expected that the European Central Bank (ECB) will further cut interest rates at both remaining monetary policy meetings this year. The ECB’s more dovish stance has intensified due to faster-than-expected inflation declines in the Eurozone and the fragile economic recovery.

Recommendations: Trading mainly with Sell orders from the current price level.