If the Fed fails to surprise, the Euro will rise further – SocGen
EUR/USD consolidates at six-week highs before the FOMC decision. Economists at Société Générale expect the pair to enjoy further gains if the meeting manages to keep the market pricing where it is today.
A 25 bps hike looks like the most likely outcome
“There’s a world in which, with natural gas prices back at 2021 levels and the Fed approaching the end of the tightening cycle as the regional banking crisis tightens financial conditions in the US (but not so much, anywhere else), the Dollar is set for a significant fall.”
“If today’s FOMC meeting manages to keep the market pricing where it is today, the Euro ought at the very least to continue its slow grind higher.”
“A 25 bps hike looks like the most likely outcome, though forecasters’ conviction levels are very low, and while we’ll get a new ‘dot plot’ and new economic projections, they will surely be shrouded in enough caveats to make it clear that the FOMC is simply buying time to see if the measures taken to stabilise the banking sector are working.”
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