EUR/USD in a key support zone

Thursday's session in the financial markets brings a recovery from the recent declines in the EUR/USD pair, which were combined with increases in the yield of American debt securities and sell-offs on the stock market. Despite the improvement in sentiment, the change in forecasts regarding the first interest rate cuts has left its mark on the markets and may itself constitute a prelude to a broader change in stock market sentiment.

Discounts may come a little later

Higher US retail sales data and recent comments from FED bankers and EBC suggested that interest rate cuts may come slightly later than the money market currently estimates. The macroeconomic background in investors' assessment has changed, money markets currently estimate the probability that the Fed will decide to make the first interest rate cut at the March meeting of the Federal Reserve at "only" 60%. As a reminder, just a week ago this value was around 70%. These revisions led to increase in the yield of American 10-year bonds, which broke above the 4,1% barrier (the highest since the first half of December 2023) and are currently trading close to this zone.

ECB minutes in the spotlight

The strong dollar has lifted EUR/USD pair to the 1.09 level, which is now a key control zone in the FX market. A possible breakout from these levels could theoretically open the way to local minimums in December 2023 in zone 1.0750.

Investors' attention today will focus on ECB Minutes, EIA data on oil stocks and gas in the USA, as well as data on unemployment benefits. On the FX market, the Japanese yen is currently recording the greatest increases. However, the Swiss franc is under heavy downward pressure. The Polish zloty is losing ground compared to other currencies today. We currently pay PLN 4,0575 for the dollar, PLN 4,4082 for the euro, PLN 4,6769 for the franc, and PLN 5,1400 for the pound.

Source: Mateusz Czyżkowski, XTB