Euro Goes 1-on-1 with US Dollar as Markets Prep for Rate Hikes from Fed and Elsewhere

Euro, EUR/USD, US Dollar, Fed, BoJ, USD/JPY, Crude Oil, Gold – talking points

  • The Euro has found a firmer footing as calm markets prevail
  • APAC Shares had a good day after a late rally on Wall Street
  • At central bank meetings, will they move EUR/USD everywhere?

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The euro has stabilized around parity ahead of tomorrow’s Federal Open Market Committee (FOMC) meeting. The Fed is expected to hike rates by 75 basis points (bps), the same move the European Central Bank made earlier this month.

In Sweden, today’s Riksbank policy decision heralds a busy week for central banks as they adjust interest rates to combat high inflation.

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While Wednesday’s focus will be on the Federal Reserve, other banks are expected to change course over the next few days, including the Bank of England, Swiss National Bank, South African Reserve Bank and Norges Bank.

The Bank of Japan is due to meet on Thursday, but it seems likely to keep ultra-loose monetary conditions despite today’s CPI coming in above forecasts. Headline inflation ended August at 3.0% yoy versus the 2.9% forecast, but it did little to affect markets.

USD/JPY had another quiet session as did most currency pairs today. Treasuries gained a few basis points along the curve, with the 2-year and 10-year benchmark yielding nearly 3.95% and 3.5%, respectively

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Crude Oil has recovered from yesterday’s plunge and is trading near where it started the week. The WTI futures contract is nearing 86 barrels while the Brent contract is just above 92 barrels.

Gold has also recovered from overnight losses and is back close to US$1,675 an ounce.

APAC stocks had a good day after a positive cash session on Wall Street. The futures markets point to a good start for the European and North American stock markets.

The US will see housing starts and building permits data, while Canada will see CPI numbers.

The full economic calendar can be viewed here.


EUR/USD remains in a descending trend channel after several days of consolidation. The descending trend line is currently dissecting at the same level as the 55-day price simple moving average (SMA) at 1.0100 and might offer resistance.

Last week high 1.0198 might also offer resistance.

On the downside, support may lie at 0.9945 recent lows and 0.9864 ahead of 0.9695 the 161.8%. Fibonacci renewal of movement between 0.9953 to 1.0369


diagram ccreated in TradingView

— Written by Daniel McCarthy, Strategist for

To contact Daniel use the comments section below or @DanMcCathyFX on twitter

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