EUR/USD: Dollar Gains Ground Against Euro as Global Markets Enter Jittery September
Global stocks sold off amid slowdown fears, but forex markets remained relatively stable as major currencies held their ground.
• The EUR/USD pair dipped on Tuesday but rebounded on Wednesday after a wave of selling swept through global markets. The selloff began in the U.S., where significant declines in America’s largest companies rippled through to Japan, leading to a 4% drop in the broad-based Nikkei. Despite the turbulence in equity markets, currency trading remained stable, with no major disruptions.
• On Tuesday, the euro-dollar exchange rate fell by 0.2% to $1.1026 but recovered to trade above $1.1050 early Wednesday. Since bottoming out at $1.06 in April, the pair has been in an upward trending channel, peaking at a one-year high of $1.12 in late August, marking a 6% rise. The prospect of lower U.S. interest rates has dampened demand for the dollar, as a lower-rate environment reduces its yield appeal.
• Looking ahead, traders are preparing for increased volatility this week with the release of the monthly jobs report. The nonfarm payrolls report for August, due on Friday, is expected to show 164,000 new jobs added to the economy. This figure will likely influence the pace of the Federal Reserve’s interest rate cuts, with some expecting a 25bps reduction, while others anticipate a larger 50bps cut.
