After hitting the session high of 1.2212, the euro rate dipped to 1.2163. The pullback was due to profit-taking in crosses, as well as in the EURUSD pair ahead of the FOMC meeting and the speech by Fed chairman Jerome Powell. After the meeting, the key pair slipped to 1.2125.
At the end of a two-day meeting, the FOMC decided to keep the target range of the federal funds rate at 0.00-0.25%. The rate decision was in line with market expectations.
The regulator announced its intention to continue asset repurchases at the rate of at least $120 bln per month until substantial progress has been made toward its maximum employment and price stability goals. The Fed’s readiness to roll out new stimulus programs put the dollar on the back foot. EURUSD recovered to 1.2201 and reached 1.2235 in Asian trading. The euro climbed above $1.22 for the first time since 2018.
Today’s macro agenda (GMT 3)
13:00 Eurozone: CPI (November)
15:00 UK: BoE interest rate decision and planned asset purchases
Major currencies are all showing green on the screen. In Asian trading, the kiwi and then cable have topped the leaderboard following remarks by the Minister of Finance of New Zealand, who said that “there is no great discomfort with the level of the NZD”. He went on to say that the kiwi’s appreciation reflects strength in the local economy. The pound is trending higher on expectations that a Brexit trade deal could still be in the cards.
At the time of writing, the euro was trading at 1.2234. The price action temporarily stalled at the 90-degree line. If a positive dynamic persists, growth will resume with renewed impetus. Market participants continue to brush off lockdowns and expect that mass vaccinations will put an end to the spread of the coronavirus. A correction should be expected in the 1.2263-1.2285 range if the EURGBP cross turns downward. Today’s focus is on the BoE meeting.