The ECB rate decision is done, and the next important decision is almost upon us: the Fed meeting. Antje Praefcke, FX Analyst at Commerzbank, analyzes
EUR/USD outlook ahead of the Interest Rate Decision. The market will stick to its well-rehearsed pattern The market will stick to its well-rehearsed pattern for now: positive data and the prospect of ‘high for longer’will provide only limited support for the Dollar now, whereas data or comments that make the likelihood of rate cuts next year seem higher will put comparatively more downside pressure on it.
However, I would not expect the Dollar to collapse either, as the ECB meeting provided the market with fresh food for its expectation that the ECB too might cut rates again next year in view of stagnating growth. If I had to decide in favour of one side or the other, I would choose the lower end in EUR/USD as being the more vulnerable, above all if the US labour market report due on Friday once again illustrates the resilience of the US economy. And due to the conflict in the Middle East.
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