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Denis Sergienko • 2022-12-14

EURUSD seesaws near six-month high ahead of Fed meeting

EURUSD seesaws near six-month high ahead of Fed meeting

Global traders took a sigh of relief as softer inflation data from the US and the UK recently renewed the market’s optimism amid hopes of witnessing slower rate hikes, as well as pivot levels, from the key central banks.

Adding strength to the upbeat sentiment are the expectations that China will announce more stimulus as IMF and ADB conveyed fears surrounding the world’s largest economy.

However, the cautious mood ahead of the key central bank meetings, starting from today’s FOMC, seems to challenge the risk appetite and the major pairs.

With this, the US Dollar remains pressured and challenges the EURUSD, as well as the GBPUSD, prices around the highest levels marked the previous day. NZDUSD was the most bearish on local fundamentals whereas AUDUSD struggles for clear directions.

Moving on, the leading Cryptocurrencies remained sidelined at a five-week high as USD weakness battles industry fears.

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Following are the latest moves of the key assets:

  • Brent oil prints mild gains around $81.00 during four-day uptrend.
  • Gold retreats from six-month high to $1,808 as it pares the biggest daily gains in a fortnight.
  • USD Index struggles for clear directions around the lowest levels since June, close to 104.00 at the latest.
  • Wall Street closed positive but stocks in Europe and the UK begin the day on softer footing.
  • BTCUSD seesaws near $1,7800 whereas ETHUSD struggles to defend the week-start gains around $1,330.

US inflation magnified pre-Fed anxiety

Although the US Dollar slumped to the six-month low on downbeat US inflation, the same increased divide between the Fed hawks and the doves amid firmer price pressure in the services industry. Additionally, the FOMC’s readiness for wild moves and the presence of economic projections, as well as Chairman Powell’s speech, amplify the importance of the event and highlight the need to be cautious.

Not only the US but the UK inflation numbers also retreated in November and hence tomorrow’s BOE will also be important, which in turn probed GBPUSD from cheering downbeat US Dollar.

That said, equities in the Asia-Pacific region remained firmer even as the US stock future struggled. Further, shares in Europe and the UK flashed mild losses during the early hours.

Additionally, gold pares the biggest daily gains in two weeks around a 5.5-month high whereas Brent oil struggles to extend recovery moves during a four-day bounce off the yearly low.

Elsewhere, BTCUSD and ETHUSD take rounds to the recently flashed five-week tops while fading the three-day north-run.

  • Strong buy: GBPUSD
  • Strong sell: ETHUSD, USDJPY
  • Buy: USD Index, USDCAD, Nasdaq, EURUSD
  • Sell: DAX, FTSE 100, gold, BTCUSD, AUDUSD

Nothing’s more important than the Fed

Although some second-tier data from the US and Canada will populate the calendar, market players are more likely to ignore them unless witnessing extreme results. The reason could be linked to the presence of the FOMC. Should the Fed policymakers choose to ignore softer CPI and remain hawkish, a US Dollar rebound and downbeat performance of the riskier assets can’t be ruled out.

May the trading luck be with you!