US Dollar Forecast: Examine the EUR/USD Decline Amid Weak Eurozone Data and ECB Rate Cuts

US Dollar Index Rises on Euro Weakness

The U.S. Dollar Index (DXY) firmed on Monday, reaching 101.229 before retreating. Supported by a sharp decline in the euro and heightened expectations of further monetary easing from the European Central Bank (ECB), this movement keeps the index well above last week’s one-year low of 100.215. A trade through 101.917 would favor a bullish trend, while a drop below 100.215 could signal a downtrend.

Euro Falls on Disappointing Economic Data

The euro declined 0.35% to $1.1122, marking its most significant single-day drop in over three months. This decline stemmed from disappointing business activity data from the eurozone, revealing an unexpected contraction in September. The weak economic figures have raised market expectations for additional ECB rate cuts, with traders now anticipating reductions totaling 42 basis points by the year's end.

Impact on Other Major Currencies

• GBP/USD: The British pound fell 0.3% to $1.3248 but rebounded to $1.3359.
• USD/JPY: The U.S. dollar eased against the yen, maintaining proximity to a two-week high.
• Gold Prices: Gold edged higher to a record $2634.91, supported by safe-haven demand.

Market Forecast

The U.S. Dollar Index is expected to stay robust in the near term, driven by ongoing eurozone economic weakness and anticipation of ECB rate cuts.