Euro Eases vs. Dollar as USD Firms, but Future Fed Cuts Limit Downside

The EURUSD pair has softened to around 1.1735 in the early European session on Friday, retreating from a 10-week high due to a modest rebound in the US Dollar. However, the pair's potential losses are expected to be limited by growing expectations of US Federal Reserve rate cuts next year, fueled by comments from Fed Chair Jerome Powell seen as less hawkish, and renewed concerns about the Fed's independence, particularly with a less hawkish candidate like Kevin Hassett potentially succeeding the current chair. Conversely, the EUR is finding support as European Central Bank President Christine Lagarde and other policymakers maintain that the current monetary policy is in a "good place," suggesting the bank may be done with rate cuts. The German Harmonized Index of Consumer Prices final reading is also anticipated later on Friday.

MIB closed up 0.5% at 43,702.01 points, the Mid-Cap up 0.1% at 58,391.77, the Small-Cap up 0.2% at 36,200.31, and the Italia Growth up 0.1% at 8,427.71 points. The CAC 40 rose 0.8%, the DAX 40 rose 0.6%, and the FTSE 100 rose 0.5%.