FX Market Update: All Eyes on the Fed as Euro and Sterling Capitalise on Softer USD.
USD – Trades slightly softer ahead of the Federal Reserve decision, with markets looking for guidance on the rate outlook and any signs of a less hawkish tone.
EUR – Gains modestly against the dollar, supported by expectations that a softer Fed stance could provide further upside for EUR/USD.
GBP – Edges higher as the dollar weakens, though gains remain measured with investors awaiting key central bank decisions.
USD: The dollar is trading with a softer tone this morning as markets position ahead of the Federal Reserve policy announcement. While rates are expected to remain unchanged, investors will be focused on the Fed’s guidance regarding inflation and the timing of any future policy adjustments. Recent USD weakness suggests that markets are becoming more sensitive to any signs of a less restrictive stance from the Fed.
EUR: The euro is trading firmer against the dollar, with EUR/USD edging higher ahead of the Fed meeting. Expectations that a softer policy message could weigh on the dollar are providing support to the single currency. For now, EUR remains focused on external drivers rather than eurozone-specific developments, with the Fed decision likely to be the key catalyst for near-term direction.
GBP: Sterling has benefited from the softer dollar backdrop, with GBP/USD moving higher in recent trade. However, the move remains largely USD-driven rather than a reflection of stronger UK fundamentals. With central bank meetings taking centre stage this week, the pound is likely to remain sensitive to shifts in broader market sentiment and policy expectations.
Economic Calendar
| Expected | Previous | ||
|---|---|---|---|
| 9:30am BST - GBP | Consumer Credit | 1.7B | 1.66B |
| 9:30am BST - GBP | Mortgage Approvals | 57.1K | 56.2K |
| 9:30am BST - GBP | Mortgage Lending | 3.95B | 2.88B |
| 3:30pm BST - USD | EIA/DOE Weekly Petroleum Status Report – Crude Oil Stocks (Net Change) | 2.01M | -1.75M |
| 7pm BST - USD | FOMC Interest Rate Decision | 3.75% | 3.62% |
| 7pm BST - USD | FOMC Monetary Policy Statement | ||
| 7:30pm BST - USD | FOMC Press Conference |