Euro: Firm Dollar keeps pressure on Euro before FOMC - Danske Bank
Danske Research Team notes that the US Dollar (USD) remained firm, pushing EUR/USD modestly lower as risk sentiment weakened. In the euro area, Germany’s September ZEW survey showed a sharp improvement in current conditions, while expectations disappointed.
The US Dollar (USD) demonstrated resilience, putting pressure on the Euro (EUR) prior to the Federal Open Market Committee (FOMC) meeting, according to Danske Bank's research team. Germany's September ZEW survey revealed a significant improvement in current conditions, but expectations for future growth fell short of market forecasts.
The team anticipates the FOMC meeting to feature a 25 basis point rate increase, along with revised economic projections and dot plots. Despite the positive German ZEW index, which reached its highest level in three and a half years, growth expectations in the euro area remained modest. This disappointment in growth forecasts can be attributed to tightening financial conditions and higher energy costs.
The US will be the focal point of market attention as investors await the FOMC meeting, with a 25 basis point rate hike being the consensus. A small group of dissenters is expected to advocate for a hold. The team believes that tightening monetary policy now is the most logical course of action. The FOMC will also release updated economic projections and dot plots during the meeting.
Meanwhile, the Australian Dollar (AUD) struggled to maintain its negative stance against the USD, trading near a monthly low due to the anticipated Fed rate hike and concerns over oil-driven inflation. The USD continued to hold its strong position, supported by rising bond yields and mounting tensions in the Middle East, which bolstered the safe-haven currency.
Written by urgent.news from FXStreet's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
This story
This is one outlet's version. Read the fullest account.
