The US dollar rose in early European trading on Tuesday, as risk sentiment was impacted by increasing tensions in the Middle East, in addition to concerns that the Federal Reserve might delay interest rate cuts. The hawkish comments from European Central Bank officials on Monday also led traders to step back from the idea of early global interest rate cuts. Joachim Nagel, the Governor of the European Central Bank, stated on Monday, “It is premature to talk about rate cuts; inflation is too high,” adding that it is necessary to avoid the mistake of lowering interest rates too early. The euro struggled to benefit from the hawkish remarks as the German economy, the largest in the Eurozone, grapples with a series of interest rate hikes.
The British pound/US dollar pair declined after the release of labor data, which showed that income growth averaged 6.6% in November, down from 7.2% in the previous month. The Bank of England is likely to view this positively as it seeks to curb one of the highest inflation rates among the G7 nations. However, the release of the Consumer Price Index for December on Wednesday is expected to be more crucial, with an anticipated decrease to 3.8% on an annual basis, a slight drop from November’s 3.9%, but still significantly higher than the central bank’s medium-term target of 2%.
Shady Fouad is a technical analyst at LDN Company
Shady's strategic vision in the currency markets is reinforced by more than fifteen years of trading experience, which enables him to blend economic and technical analyzes with high efficiency, and find the best investment ideas for traders.
