The EUR/USD pair remains on the defensive around 1.0935 during the early European session on Friday. The hotter-than-expected US inflation reading on Thursday has provided some support to the Greenback and caps the upside for the pair.
The warmer US Consumer Price Index (CPI) reading coupled with the stronger-than-expected September jobs report strengthens the chance that any future rate cuts by the US Federal Reserve (Fed) should be gradual. The CME FedWatch Tool showed investors boost the odds that the Fed will trim its policy rate by 25 basis points (bps) in November to 83.3% following the CPI release.
Market players will take more cues from the US Producer Price Index (PPI) for September, along with the preliminary reading of the Michigan Consumer Sentiment Index for October, which is due on Friday. The headline PPI is expected to show an increase of 1.6% YoY in September, while the core PPI is estimated to see a rise of 2.7% YoY in the same reported period. Nonetheless, if the report shows a softer outcome, this could undermine the US Dollar (USD) against the shared currency.
The European Central Bank (ECB) policymakers support a rate cut amid the economic slowdown, which might exert some selling pressure on the Euro (EUR). The ECB is anticipated to lower rates twice this year and a cut to the 3.5% deposit rate next week. More than 90% of economists polled by Reuters expect a reduction next week, with a similar majority betting on a follow-up move in December.
The Harmonized Index of Consumer Prices (HICP) inflation data from Germany is due later on Friday, which is expected to hold steady at 1.8% YoY in September. More By This Author:USD/CAD Extends Upside To Near 1.3750 Ahead Of US PPI, Canadian Job Report Australian Dollar Extends Decline As Traders Brace For US CPI Data WTI Holds Below $73.50 As Middle East Tensions Ease
