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EUR/USD jumped a full big figure on Powell’s remarkably dovish comments yesterday and also propelled EUR/GBP higher along with it, notes Arne Lohmann Rasmussen, Chief Analyst at Danske Bank.

Key Quotes

“The latest shift in voice could mark a clear shift in Fed policy and November minutes today could be key in whether markets take out more hikes for 2019 and/or price in more in the way of cuts further out. Needless to say, this will also be instrumental for USD where the carry lure remains key in upholding stretched long positioning. If we see a drop in US core inflation today, Fed pricing should soften and weigh further on USD.”

“EUR/GBP traded higher along with the big jump in EUR/USD yesterday. We still see risks skewed on the upside in the near term as the path towards Brexit remains muddy. We see a high risk that the Brexit issue will remain unresolved after the vote in the House of Commons on 11 December, suggesting that a period of high volatility could be prolonged and the big break lower in EUR/GBP might not come this year.”