EUR/USD Holds 1.1600 Despite Weekly Pullback as Fed Cut Bets Cool

EUR/USD Ends Week Higher Despite Friday Softness

The EUR/USD pair slipped 0.10% on Friday but still finished the week up 0.51%, supported by improving risk sentiment earlier in the week and stable Eurozone economic data. Despite the late-week pullback, the pair held firmly above the 1.1600 level — a key psychological and technical support zone.

Investors shifted cautiously as expectations for a December Federal Reserve rate cut weakened, tempering bullish momentum for the Euro but not enough to break the pair’s broader uptrend.

Hawkish Fed Voices Trim Rate-Cut Odds

Since mid-week, several Federal Reserve officials leaned decisively hawkish. Regional presidents — including Beth Hammack, Raphael Bostic, Alberto Musalem, Susan Collins, Neel Kashkari, and Jeffrey Schmid — emphasized the need to maintain a modestly restrictive monetary stance.

On the dovish side, Fed Governor Stephen Miran, San Francisco Fed’s Mary Daly, and Governors Christopher Waller and Michelle Bowman argued that weakening labor market data supports easing.

Fed Chair Jerome Powell and New York Fed’s John Williams remained neutral, with Powell reiterating that a December rate cut is not guaranteed, citing insufficient fresh data.

Money markets now assign a 56% probability to a 25-bp cut — down sharply from 70% a year earlier.

Eurozone GDP: Slow but Steady Growth

European data offered modest support to the Euro:

Q3 GDP: +0.2% QoQ
YoY GDP: revised upward to 1.4% from 1.3%

The figures indicate a slow but stable expansion, helping counterbalance U.S. dollar strength driven by Fed rhetoric.

Market Movers: Dollar Strengthens on Fed Commentary

The U.S. Dollar Index (DXY) edged up 0.08% to 99.31, aided by hawkish remarks from Fed officials.

Fed Governor Stephen Miran repeated that recent data should make policymakers “more dovish, not less.”
Kansas City Fed’s Jeffrey Schmid defended his dissent against the latest rate cut, calling current policy “only modestly restrictive” and appropriate in the current environment.

These contrasting views underscore the Fed’s divided stance heading into December.