The common currency Euro slipped to a 3-week trough versus the US Dollar as FX traders reevaluate their expectations regarding a possible Federal Reserve rate cut later this month. Friday's unexpectedly upbeat labor report has market players questioning the Fed's rationale for dovish posturing. Only a week ago, the odds were at about 25% that the Fed would lower its benchmark rate by as much as 50 basis points, but those odds were significantly reduced to about a 6% likelihood that the Fed will lower rates on July 31st, when the Fed's Federal Open Market Committee announces its policy decision.
As reported at 10:17 am (GMT) in London, the EUR/USD was trading lower at $1.1197, down 0.1854%; the pair has ranged from a trough of $1.11934 to a high of $1.2190 in today's trading session. The EUR/GBP was trading at 0.8982 Pence, a gain of 0.278% and off the earlier peak of 0.89913 Pence.
Traders Look Ahead to Powell Testimony
Analysts expect more FX traders to firm up their own positions on the Dollar after the Federal Reserve chairman, Jerome Powell, testifies before the U.S. Congress. That testimony, beginning tomorrow and concluding on Thursday, could provide clues as to the Fed's thinking on the global growth outlook and its impact on Dollar strength. That the trade rift between the US and China has not worsened since the G20 summit is also helping to provide a lift to Dollar sentiment.