EUR/USD: Looking To Repeat July FOMC Price Action Next Week – Danske

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EUR/USD enjoyed (or suffered) significant volatility in response to the European Central Bank’s decision. It now faces the Fed. Where next?

Danske Research discusses EUR/USD outlook around next week’s FOMC policy meeting.

“We expect the Fed to cut again next week in line with market pricing..  We expect the Fed to repeat its easing bias and to lower its dot plot to signal one more cut is on the cards but without a pre-commitment to this,” Danske notes.

“The market is priced for a 25bp, but is still expecting this to be followed by more rate cuts. If the Fed delivers a 25bp cut next week, the deciding factor will be the forward guidance on interest rates. Here we see a potential for the Fed to disappoint the market, which would weigh on EUR/USDPrice action in EUR/USD during the July FOMC meeting could provide a good blue print for what to expect from next week’s meeting. EUR/USD dropped some 50pips as Fed only cut 25bp and failed to pre-commit to further rate cuts. We would not be surprised to see a reaction of similar magnitude next week.

In the medium term, we still expect Fed to eventually get ahead of the curve in terms of monetary easing and weaken USD and push EUR/USD higher. However, that is likely a story for next year. In the meantime, we look for EUR/USD to trade close to 1.10 on 1-3M,” Danske adds.

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Yohay Elam – Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I’ve accumulated. After taking a short course about forex. Like many forex traders, I’ve earned the significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I’ve worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.

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