- EUR/USD has sensed a sigh of relief after dropping to near 0.9813.
- Extreme hawkish guidance from the Fed has demolished the shared currency bulls.
- Russian military threat to use nuclear weapons has underpinned the risk-off impulse.
The EUR/USD pair is displaying a lack of selling pressure while re-testing Wednesday’s low at 0.9813 in the Tokyo session. The asset has turned sideways which could be considered as an intraday inventory accumulation, which could ditch the downside momentum for a while. On a broader note, the major witnessed a steep fall after delivering a downside break of the consolidation formed in a 0.9950-1.0050 range.
The shared currency bulls witnessed extreme volatility on Wednesday over the monetary policy announcement by the Federal Reserve (Fed). The currency market arena got electrified after Fed chair Jerome Powell escalated guidance on interest rates.
A rate hike by 75 basis points (bps) was already expected by the market participants and the latter have already priced them in risk-perceived assets. However, a higher-than-expected hawkish stance on interest rates by the Fed spooked the market sentiment.
The Fed sees terminal rates making top at 4.6%, higher than the former expectations of 3.8%. Fed’s Powell is ready to sacrifice the growth projections, employment generation, housing sales, and demand for durable goods to fix the inflation chaos.
Meanwhile, the shared currency bulls are worried over fresh impetus on Russia’s nuclear attack talks. Russian leader Vladimir Putin’s announcement of military mobilization and threat to use nuclear weapons have refreshed fears of war situation. The retaliation from Russia against western sanctions has triggered a risk-off impulse.
Also, the German government is exploiting its all measures of collecting energy to make sufficient inventories to cater to the demand during the winter season.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD falls toward 1.0800 as USD gathers strength
EUR/USD came under renewed bearish pressure and declined toward 1.0800 in the American session on Monday. The bearish opening in Wall Street confirmed risk-averse conditions and provided a boost to the USD, causing the pair to stretch lower.
Gold to remain volatile, with risks of extending pullbacks Premium
Gold price staged a deep correction from the record top it set near $2,150 and declined below $2,050. Recovering US Treasury bond yields and risk aversion help the USD find demand and make it difficult for XAU/USD to shake off the selling pressure.
GBP/USD closes in on 1.2600 as mood sours
GBP/USD stays on the back foot and trades near 1.2600 in the American session. The US Dollar continues to find demand as a safe haven and weighs on the pair while major equity indexes in the US push lower after the opening bell.
Bitcoin price could revisit $45,000 according to crypto analyst
Bitcoin price crossed the $41,000 mark on Binance, in its ongoing uptrend. BTC price rally is likely driven by the anticipation of Spot Bitcoin ETF approval. There are more catalysts driving BTC price gains in the current cycle.
The week ahead – US Nonfarm Payrolls, RBA and BoC in spotlight
Last month’s October jobs report was the first one this year when the headline number came in below market expectations, though not by enough to raise concerns over the resilience of the US economy.