As FOMC’s decision nears, the EUR base rate weakens against USD
As the Asian session begins, the EUR base rate extends its losses by a minuscule 0.01% against the US Dollar (USD) as market participants prepare for the US Federal Reserve’s decision.
The Greenback makes a comeback, fueled by a surge in US Treasury bond rates. The EUR/USD is trading at 1.0677, following Tuesday’s losses of 0.12%.
US Economic Strength and Fed’s Likely Stance
The US 10-year Treasury Bond yield soared to a 16 year high of 4.36%. This was a blow to the Euro exchange which is still close to the 1.07 figure. Still, it’s set to continue to print losses amidst speculations the Fed would deliver a hawkish hold.
Given that recent data in the United States showed the robustness of the economy, with a hot jobs market, improvement in business activity, and consumer spending expanding – though at a lower rhythm – are reasons for the Fed Chair Powell and Co. to keep “at it,” and hold rates higher for longer. Furthermore, last week’s Consumer and Producer Price Index (CPI and PPI) printed higher readings, justifying the need for higher rates.
In addition to delivering their monetary policy decisions, policymakers would also update…