EUR/USD has posted slight losses in the Friday session. Currently, the pair is trading at 1.1422, down 0.20% on the day. On the release front, German GfK Consumer Confidence remained pegged at 10.4, edging above the estimate of 10.3 points. It’s a busy day in the U.S., highlighted by Final GDP for the third quarter, with an estimate of a strong 3.5% gain. Durable good orders is expected to rebound with a gain of 1.6%. As well, the Core PCE Price Index, which is the Federal Reserve’s preferred gauge of inflation, is forecast to edge up to 0.2%.
The euro has climbed over 1.0% this week, and EUR/USD pushed close to the 1.15 line on Thursday. The dollar was broadly lower on Thursday, as investors reacted coolly to the Fed’s rate statement. The statement was less dovish than the markets wanted, as policymakers continued to stick with their policy of gradual increases. The Fed downscaled its forecast for rate hikes in 2019. from three hikes to two. Just a few months ago, the markets were predicting a “rate hike every quarter” for 2019, but the Fed has made a U-turn in monetary policy, as policymakers respond to economic data which is pointing to slower economic growth.
Aside from disappointment over the Fed statement, the euro also was boosted from an important development on the domestic front. Italy’s populist government has been on a collision course with the EU over its budget, which provides for hefty spending. The EU had argued that the budget breaches its financial rules and had threatened financial sanctions against Rome. However, the deadlock appears over, as the parties announced on Wednesday that Italy had agreed to lower its deficit target to 2.04%, down from its original target of 2.4%.
