Despite prominent ECB officials emphatically stating the conversation around rate cuts is premature, the futures market anticipates nearly 100 basis points of cuts in 2024 which paces alongside US expectations. Therefore, the euro no longer holds a notable advantage as far as interest rate expectations are concerned.
Nevertheless, EUR/USD has put in a strong performance after US inflation data fell encouragingly on Tuesday. The unwinding of US outperformance is forcing markets to reassess whether the world’s largest economy is showing signs of frailty like the rest of the major economies.
