EUR/USD moves beyond the monthly range as the Fed keeps rates on hold.
The Relative Strength Index (RSI) points to a deeper decline as the oscillator reverses ahead of trendline resistance to keeping the bearish bias from late July
EUR/USD fails to hold gains after the European Central Bank (ECB) meeting hitting a monthly low (1.1737) as the Fed’s Summary of Economic Projections (SEP) shows no change to the interest rate path reflected on the dot plot.
The market’s reaction points to expectations of a more dovish forward guidance as the the Fed shifts its framework to allowing inflation to overshoot over time. The Fed is not in any rush to change policy evidenced by the fact that longer run interest rate forecast remains unchanged from the June meeting.
The Fed looks set to rely on its current tools to support the US economy, pledging to “increase its holdings of Treasury securities and agency mortgage-backed securities at least at the current pace,” .
The Fed could continue with the same script at the next interest rate decision on November 5 particularly as forecasts have been revised upwards.
The Fed could of course adjust forward guidance over the coming months, given that they stand prepared to adjust policy according to the risks. That said, the current wait-and-see approach may keep current market trends in place as the Fed’s balance sheet expands back above $7 trillion in August.
Currencylive.com is a news site only and not a currency trading platform. Currencylive.com is a site operated by Wise US Inc ("We", "Us"), a Delaware Corporation. We do not guarantee that the website will operate in an uninterrupted or error-free manner or is free of viruses or other harmful components. The content on our site is provided for general information only and is not intended as an exhaustive treatment of its subject. We expressly disclaim any contractual or fiduciary relationship with you on the basis of the content of our site, any you may not rely thereon for any purpose. You should consult with qualified professionals or specialists before taking, or refraining from, any action on the basis of the content on our site. Although we make reasonable efforts to update the information on our site, we make no representations, warranties or guarantees, whether express or implied, that the content on our site is accurate, complete or up to date, and DISCLAIM ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. Some of the content posted on this site has been commissioned by Us, but is the work of independent contractors. These contractors are not employees, workers, agents or partners of Wise and they do not hold themselves out as one. The information and content posted by these independent contractors have not been verified or approved by Us. The views expressed by these independent contractors on currencylive.com do not represent our views.