As the market eagerly awaits the Federal Reserve’s policy decisions, Rabobank’s Senior FX Strategist Jane Foley highlights the importance of these potential moves. Market expectations of a September rate cut from the Fed have been growing, leading to a weaker USD compared to other G10 currencies.
While specific factors have supported some currencies against the USD, such as the BoJ’s rate hike and the UK’s change in government, others have faced challenges. The BoC, Riksbank, and RBNZ have all cut rates recently, and the ECB announced a second rate cut with more expected in the future. Despite expectations of Fed easing keeping the USD under pressure, less favorable Eurozone fundamentals could limit the upside potential for EUR/USD, with a risk of dips back to 1.10.
Analysis:
The article discusses the impact of the Federal Reserve’s policy decisions on the EUR/USD exchange rate. Market expectations of a rate cut have weakened the USD against other currencies, but challenges in the Eurozone could limit the EUR’s strength. For investors, this means potential risks in the EUR/USD pair and the need to monitor central bank policies and economic conditions for trading opportunities.