EURUSD got rid of emotions. Overview for 01.12.2023

The primary currency pair retreated lower by Friday. The current EURUSD exchange rate stands at 1.0904.

Excessive market emotions are gradually subsiding.

In October, Americans' earnings increased by 0.2% m/m, following a previous 0.4% m/m growth. This result was expected. Spending also rose by 0.2% m/m after a 0.7% increase in September.

These average results can be interpreted as an intermediate stage in economic development.

The Federal Reserve’s beloved inflation report provided interesting data. The Core PCE Price Index in October grew by 0.2% m/m, just as forecasted. Core inflation in September saw a 0.3% increase. In a year-on-year comparison, the indicator in October was 3.5%, compared to 3.7% previously.

It turns out that inflation is indeed slowing down, meaning the regulator has no real arguments in favour of increasing the interest rate. However, nothing prevents it from keeping the rate high for as long as necessary.

For example, the eurozone has long managed inflation. According to preliminary data, the CPI in November dropped to 2.4% y/y from 2.9% earlier. The forecast suggested a decrease to 2.7%.