EUR/USD – Will the Fed deliver a dovish final hike or add a hawkish twist?
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<li data-slate-block="regular" data-slate-type="paragraph" data-slate-value="{" data-slate-node="element"><strong>Fed and ECB will have a big role to play in EURUSD moves over the next 24 hours</strong></li>
<li data-slate-block="regular" data-slate-type="paragraph" data-slate-value="{" data-slate-node="element"><strong>Will both offer a final dovish hike and emphasize data dependency?</strong></li>
<li data-slate-block="regular" data-slate-type="paragraph" data-slate-value="{" data-slate-node="element"><strong>EURUSD faces a big test around 1.10 after breaking out earlier this month</strong></li>
</ul>
<p data-slate-block="regular" data-slate-type="paragraph" data-slate-value="{" data-slate-node="element"><span data-slate-node="text">EURUSD is trading a little choppy over the last couple of days with traders clearly heavily focused on the outcome of the Fed and ECB meetings.</span></p>
<p data-slate-block="regular" data-slate-type="paragraph" data-slate-value="{" data-slate-node="element"><span data-slate-node="text">In both cases, a 25 basis point rate hike is heavily backed in the markets, but at the same time, the language that accompanies the decision and what comes next is less obvious.</span></p>
<p data-slate-block="regular" data-slate-type="paragraph" data-slate-value="{" data-slate-node="element"><span data-slate-node="text">I think there’s every chance that in both cases, policymakers opt to accept that a pause at the next meeting may be appropriate while in no way closing the door on further hikes in the months ahead.</span></p>
<p data-slate-block="regular" data-slate-type="paragraph" data-slate-value="{" data-slate-node="element"><span data-slate-node="text">In other words, data dependency will be heavily emphasized with the overall tone perhaps being a dovish hike with a slight hawkish twist. The last thing policymakers want is for investors to perceive this to be the end of the tightening process but that will be a very tough message to get across, particularly in the absence of fresh forecasts.</span></p>
<p data-slate-block="regular" data-slate-type="paragraph" data-slate-value="{" data-slate-node="element" data-slate-fragment="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"><span data-slate-node="text">The economic data has undoubtedly improved as far as inflation prospects are concerned while the economy is clearly weakening, furthering the case for a pause in September. Both of these factors will likely be emphasized when signaling that further hikes will depend on the data.</span></p>
<p data-slate-block="regular" data-slate-type="paragraph" data-slate-value="{" data-slate-node="element" data-slate-fragment="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"><iframe loading="lazy" width="560" height="315" src="https://www.youtube.com/embed/umVwnuLV2GE" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen></iframe></p>
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<p><strong>Can EURUSD hold onto recent gains?</strong></p>
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<p>The pair has pulled back over the last week or so after finally breaking above 1.10 earlier this month.</p>
<p><strong>EURUSD Daily</strong></p>
<p><a href="https://www.marketpulse.com/wp-content/uploads/2023/07/EURUSD_2023-07-26_16-36-31.png" target="_blank" rel="noopener"><img loading="lazy" class="aligncenter wp-image-806632" src="https://www.marketpulse.com/wp-content/uploads/2023/07/EURUSD_2023-07-26_16-36-31-1024×441.png" alt="" width="619" height="267" srcset="https://www.marketpulse.com/wp-content/uploads/2023/07/EURUSD_2023-07-26_16-36-31-1024×441.png 1024w, https://www.marketpulse.com/wp-content/uploads/2023/07/EURUSD_2023-07-26_16-36-31-300×129.png 300w, https://www.marketpulse.com/wp-content/uploads/2023/07/EURUSD_2023-07-26_16-36-31-768×331.png 768w, https://www.marketpulse.com/wp-content/uploads/2023/07/EURUSD_2023-07-26_16-36-31-1536×662.png 1536w, https://www.marketpulse.com/wp-content/uploads/2023/07/EURUSD_2023-07-26_16-36-31.png 1793w" sizes="(max-width: 619px) 100vw, 619px" /></a></p>
<p>Source – OANDA on Trading View</p>
<p>A weaker dollar has stemmed from data in the US becoming more Fed-friendly – weaker inflation, softer economy – but this week the ECB will be equally as influential in determining whether the pair stays above 1.10 or slips back below.</p>
<p>Of course, the Fed is up first so it will set the tone to begin with. A hawkish Fed could strengthen the dollar and put pressure on support around 1.10, the lower bound of the range – 1.10-1.11 – that provided so much resistance over the course of 2023.</p>
<p>Anything deemed dovish could see the pair rally once more, in effect confirming the breakout earlier this month and potentially putting pressure on last week’s highs, maybe even beyond.</p>
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