EUR/USD: Fed seen waiting as pair holds gains – Danske Bank

Danske Research Team notes that EUR/USD moved back above 1.15 as US Treasury yields declined and risk sentiment recovered. The bank does not expect the upcoming FOMC meeting to significantly alter the EUR/USD outlook, seeing the Federal Reserve in a wait-and-see mode regarding the Iran conflict. Markets still price one US rate cut this year, while Danske expects two.

Fed meeting unlikely to shift pair

"EUR/USD shifted back above 1.15 yesterday amid declining UST yields and cautiously recovering risk sentiment."

"The main event will be the FOMC meeting tonight. We and markets expect no monetary policy changes. Markets are still pricing in one more rate cut later in the year, while we call for two. US February PPI data will be released in the afternoon ahead of the rate decision."

"We do not expect tonight's FOMC meeting to be a game changer for EUR/USD, as the Fed remains in a comfortable position to just wait-and-see how the war in Iran evolves."

"We also receive final February inflation data for the eurozone ahead of ECB's policy rate decision tomorrow. Inflation figures are expected to confirm flash estimates."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)