Skip to Content
News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
More View More
EUR/USD Rate Outlook Hinges on Fed Rate Decision

EUR/USD Rate Outlook Hinges on Fed Rate Decision

David Song, Strategist

Euro Rate Talking Points

EUR/USD snaps the recent series of higher highs and lows following the European Central Bank (ECB) meeting, and the exchange rate may struggle to retain the advance from the monthly low (0.9632) as the Federal Reserve is expected to implement another 75bp rate hike.

EUR Forecast
EUR Forecast
Recommended by David Song
Get Your Free EUR Forecast
Get My Guide

Fundamental Forecast for Euro: Bearish

EUR/USD continues to pullback from a fresh monthly high (1.0094) as the ECB emphasizes that the Governing Council has “made substantial progress in withdrawing monetary policy accommodation,” and it seems as though President Christine Lagarde and Co. have little intentions of pursuing a restrictive policy as economic activity in the Euro Area is expected to weaken over “the remainder of this year and the beginning of next year.”

image2.png

In contrast, the Federal Open Market Committee (FOMC) may continue to strike a hawkish forward guidance at its next interest rate decision on November 2 as the update to the US Personal Consumption Expenditure (PCE) Price Index shows another uptick in the Fed’s preferred gauge for inflation.

In turn, the FOMC may maintain its approach in combating inflation as “many participants emphasized that the cost of taking too little action to bring down inflation likely outweighed the cost of taking too much action,” and the committee may show a greater willingness to carry out a highly restrictive policy as the Non-Farm Payrolls (NFP) report points to a resilient labor market.

With that said, another 75bp Fed rate hike along with a hawkish forward guidance may drag on EUR/USD, and the exchange rate may face headwinds throughout the remainder of the year as FOMC plans to carry its hiking-cycle into 2023.

Forex for Beginners
Forex for Beginners
Recommended by David Song
Forex for Beginners
Get My Guide

--- Written by David Song, Currency Strategist

Follow me on Twitter at @DavidJSong

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES