Euro continues to slide as Dollar extends rally

EURUSD posted a fresh year low near 1.0530 in European trading on Thursday and extends its losing streak for the fifth day.

The major currency pair has faced an intense sell-off as the Dollar continues to enjoy upside momentum, being one of the major beneficiaries of President-elected Donald Trump’s win in the US presidential election.

The DXY Dollar Index, which gauges the Greenback’s value against six major currencies, climbs to near 106.80, the highest level seen since November 1, 2023.

It will be easy for Trump to implement the agenda of lower taxes on businesses and workers, as well as high import tariffs, as Republicans have ensured control of the Senate and the House of Representatives, according to the Associated Press.

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An increase in import tariffs would increase the demand for domestically produced goods and services, which would boost inflationary pressures that limit the potential of the Federal Reserve to cut interest rates faster and deeper.

The greenback rose sharply on Wednesday after the release of the US Consumer Price Index (CPI) data for October. The inflation report showed that price pressures grew expectedly on a monthly as well as annual basis, boosting expectations of interest rate cuts in the December meeting.

According to the CME FedWatch tool, the probability of the Fed cutting interest rates by 25 basis points (bps) to 4.25-4.50% next month increased to 83% from 59% a day before.

In Thursday’s session, investors will pay close attention to Fed Chair Jerome Powell’s commentary in a panel discussion hosted by the Federal Reserve Bank of Dallas later the day. Market participants would like to know his stance on December’s monetary policy decision and the impact of Trump’s policies in the medium and longer term.

On the economic front, investors will focus on the US Initial Jobless Claims for the week ending November 8 and the Producer Price Index (PPI) data for October.