EUR/USD is extending gains on Thursday, trading back toward the 1.1700 region after rebounding from intraday lows around 1.1680. The pair remains supported by broad US Dollar softness following the Federal Reserve’s dovish policy stance, though a cautious market mood—driven by renewed concerns over a potential AI-sector bubble—is capping further Euro upside.
Risk sentiment soured after Oracle’s sales and revenue outlook released on Wednesday fell short of expectations. The cloud-computing giant has heavily invested in AI, including a $300 billion agreement with Open AI and plans for multiple AI data centers. The disappointing figures have reignited questions about how effectively these investments can translate into real revenue.
This bout of market anxiety helped the safe-haven US Dollar stabilize slightly after its steep post-Fed decline. On Wednesday, the Fed delivered a widely expected 25-basis-point rate cut, but the policy statement and Chair Jerome Powell’s comments leaned more dovish than markets anticipated. Powell appeared more comfortable with the inflation outlook, suggesting a stronger possibility of additional rate cuts in 2026.
Daily Digest – Market Movers: Risk-off sentiment slows the Euro’s advance
The Euro surged on Wednesday as the Dollar slumped following the Fed’s softer tone. However, with risk appetite deteriorating, EUR/USD faces resistance above 1.1700. While sustained risk aversion may limit further gains, downside pressure is likely to remain shallow due to the Fed’s dovish signals.
The Fed lowered rates to the 3.50%–3.75% band and the updated dot plot pointed to just one further rate cut in 2026. Limited hawkish dissent—only two policymakers preferred to keep rates unchanged—and Powell’s remarks ruling out rate hikes have strengthened expectations that at least two more cuts may be delivered next year, as reflected in the CME FedWatch Tool.
Markets are also factoring in the potential appointment of Kevin Hassett as the next Fed Chair when Jerome Powell’s term ends in May. Hassett, known for his dovish leanings, commented earlier this week that there is “plenty of room” for deeper rate cuts.
Adding to Dollar pressure, the Fed announced a new bond-buying program set to begin on December 12, starting with a $40 billion purchase to support liquidity—an unexpected move that caught investors off guard.
