EUR/USD is consolidating above 1.0600. Economists at ING expect the pair to turn back lower below the 1.0500 level on a credible rate protest from the Federal Reserve.
Powell effect larger than the Lagarde effect
“Today’s FOMC announcement will tell us whether the Fed can still offer some support to the Dollar, and tomorrow’s European Central Bank announcement may give hints about balance sheet reduction. However, the Lagarde effect on EUR/USD should be significantly smaller and shorter-lasting than the Powell effect.”
“A dovish Fed today could open the door for a rally to 1.0800 before Christmas, but we favour a correction to sub-1.05 levels instead, fuelled by a Fed rate protest and higher energy prices.”
See – Fed Preview: Forecasts from 18 major banks, downshift to 50 bps
