EUR/USD: Euro Slides Below $1.08, Nears 4-Month Low amid Broad Dollar Strength

Stronger US dollar is buoyed by prospects of a rate-cut slowdown while ECB shows no signs of fatigue on the path to rate cuts, wrecking the euro.

• The EURUSD pair continued its steep drop Thursday morning with just three green days of the past 18 sessions. The euro slumped under $1.08 with an intraday low (and a near-four-month bottom) of $1.0770 before traders picked it up and buoyed it higher but still under the $1.08 milestone. Persistent dollar strength is punishing the valuations of rival currencies with the dollar index surging above 104 amid a flurry of factors.
• The euro’s hopeless decline is coming with the special intervention of the European Central Bank, which is cutting interest rates like there’s no tomorrow. A total of three rate cuts have been introduced by the ECB this year as the central bank is rushing to patch up an ailing economy. What’s more, ECB President Christine Lagarde has vowed to continue on the same path and traders are pricing in three more cuts to borrowing costs through March.
• Stateside, we’ve got a Federal Reserve that has slowly pivoted to a more dovish stance with plans to gradually wind down interest rates. The US central bank is gathering on November 6-7 to decide the fate of borrowing costs and expectations are set for a casual 25-basis-point cut. How’s all that affecting the euro-dollar trade? Interest rate cuts typically knock the valuation of the local currency, hence the extended weakness in the euro.